The US$70 billion Shell and BG Group mega merger received antitrust clearance from the Australian Competition and Consumer Commission (ACCC).
 |
|
Image from Shell. |
This leaves the group with remaining pre-conditional clearances from Australia’s Foreign Investment Review Board (FIRB) and China’s Ministry of Commerce (MOFCOM).
“The filing process in China continues to progress well and the combination remains on track for completion in early 2016,” commented Shell CEO, Ben van Beurden.
“The Shell BG combination is a sign of Shell’s confidence in the Australian economy. It’s also a springboard to change Shell into a simpler, more profitable and resilient company in a world where oil prices could remain low for some time,” he said.
During its review, the ACCC considered whether the proposed acquisition would reduce the supply of gas, or reduce competition to supply gas to domestic customers by aligning Shell’s interest in Arrow Energy with BG’s LNG facilities in Queensland.
“The ACCC concluded that as Arrow is not currently focused on supplying domestic customers, and appears unlikely to be so in the future, aligning Arrow with an LNG operator would not change competition for the supply of gas to domestic customers,” said Rod Sims, chairman, ACCC.
“While recognizing the current high degree of uncertainty about the future development of the industry, the ACCC considers that BG’s focus is on supplying the QCLNG facilities.
“A key issue was whether, in the absence of the proposed acquisition, BG and Arrow would both have excess gas above their LNG commitments and whether they would offer that gas to domestic customers,” Sims added.
“However, there is too much uncertainty about the amount and timing of future gas supplies for the ACCC to be satisfied that Arrow and BG would be meaningful competitors in the domestic market in the absence of the acquisition.”
During the review process, a large number of market participants expressed their concerns of this acquisition, and some urged the ACCC to approve the acquisition, but only with undertakings from the merger parties to make gas available domestically.
“In the course of its review, the ACCC considered potential undertakings suggested by interested parties,” Sims said.
“The ACCC can, however, only accept undertakings where competition concerns arise from the acquisition and it finds that certain undertakings can effectively address those concerns. In this case, the ACCC did not find merger specific competition concerns that required an undertaking to remedy.
“The ACCC will continue to consider many of the issues raised by gas users about the structure of the industry as part of its East Coast Gas Inquiry,” added Sims.
The East Coast Gas Inquiry is a separate 12-month review being conducted by the ACCC into the competitiveness and structure of the east Australian gas industry, scheduled to be finalized in April 2016.
Shell has already received merger clearance by competition authorities in the US, Brazil and Europe.
Subscribe
