Fair Trading Commission wrapping up its probe of Total Jamaica acquisition of Epping Oil


Fair Trading Commission wrapping up its probe of Total Jamaica acquisition of Epping Oil

Observer business writer

Wednesday, September 18, 2019

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The Fair Trading Commission (FTC) is close to wrapping up its investigation to determine the likely effect on competition for petroleum products from Total Jamaica Limited's planned acquisition of one of its primary competitors, Epping Oil Company.

The Jamaica Observer has been informed that the FTC is close to handing down its ruling having combed through several documents and analysis reports regarding the planned sale and the impact it would have on the petroleum wholesale and retail markets.

Both companies have complied with a request from the FTC for information regarding the impending sale, as well as the business operations of both companies. Total Jamaica is owned by French oil company Total SA, while Epping is owned by businessman Neville Marsh.

The FTC's investigation aims to identify those regions of Jamaica that are likely to be adversely affected by the merger of the two companies, specifically those in which competition will likely be eliminated between the parties. The investigation body by Jamaica's competition regulatory was initiated following media reports in May this year of the intention of Total Jamaica Limited to acquire Epping Oil Company.

The investigation is being conducted pursuant to Section 17 of the Fair Competition Act (FCA), which addresses agreements that lessen competition.

Prior to the acquisition, both Epping and Total trade at the wholesale and retail levels of the petroleum products industry. Other participants at the wholesale level include Petrojam, Gulfstream Petroleum SRL (Texaco), RUBiS Energy Jamaica Ltd, MZ Holdings Ltd (Cool Oasis), Future Energy Source Company Ltd (FESCO), Johnson's Petroleum Company Ltd and Jampet.

It must be noted that each wholesale supplier sells only to its respective retailers; for example, Texaco sells only to Texaco service stations. There are approximately 250 retail outlets, where each retailer is supplied by only one wholesale or marketing company.

Additionally, some retail outlets are owned by or are franchises of a marketing company. The FTC made the point that while there are 250 outlets, they do not all compete with each other by virtue of their location.

The shorter the distance between two service stations the more likely they are to compete with each other. Accordingly, the investigation aims to identify also those regions that are likely to be adversely affected by the merger; specifically, regions in which competition will likely be eliminated between the two parties.

Total first entered the Jamaican market about 15 years ago when it acquired the national gas station network owned by Roy DeCambre, which at the time gave Total around 10 per cent market share.

Total later increased its market share and network with the acquisition of the Esso stations.

The FTC in Jamaica is led by Executive Director David Miller.

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