The decision is conditional upon an extensive commitments package including the divestment of over 200 petrol stations and Shell's commercial fuels business. The Commission had concerns that the merger as initially notified could have led to higher prices for fuel, diesel, gasoline and light heating oil customers in Denmark. The commitments offered by the companies address these concerns.
The Commission's investigation
The Commission's investigation focused on the Danish petrol station market (retail) and the wholesale markets of various refined oil products, where both Dansk Fuels and SFR are active.
The Commission identified competition concerns with regard to the following markets in Denmark: the petrol station market; and the wholesale markets for diesel, gasoline, light heating oil and heavy fuel oil. The transaction combines the fuel businesses of number 1 and 2 on the Danish wholesale markets and number 1 and 3 on the petrol station market in Denmark. The Commission had concerns that the remaining players would be unable to exercise a sufficient competitive constraint on the merged entity to avoid price rises at petrol stations and for wholesale customers.
The Commission also investigated links between the companies' activities on vertically related markets and in particular the relationship arising from the companies' activities in both the upstream wholesale of diesel, gasoline and light heating oil to resellers or retailers, and the downstream wholesale and retail supply of these products to end-customers. The Commission had concerns that the merged entity would have had the ability and the incentive to shut out competing resellers or retailers from access to these products, because of its high market share on the upstream markets and the higher margins to be made on the downstream markets.
In order to address the Commission's competition concerns, SFR offered a comprehensive remedies package including:
- divestment of a nationwide network of 205 Shell and SFR fuel stations;
- divestment of Shell's commercial fuels business and aviation fuel activities;
- a supply agreement with Dansk Shell (i.e. the Shell Refinery in Fredericia) valid until the end of 2016;
- access to two third party oil terminals and to SFR's oil terminal in Aalborg;
- a trademark license agreement with Shell allowing the buyer of the divested businesses to use the Shell brand;
- the transfer of roughly two thirds of Dansk Shell’s B2B customers to the buyer of the divestment businesses (fleet and commercial road transport ("CRT"))
- the ability for the buyer of the divestment businesses to issue euroShell cards to Danish customers and to accept international euroShell cards at all of its retail sites;
- the offer of a card acceptance agreement with SFR for acceptance of the euroShell card at 75 SFR sites for an initial period of 12 months which may be prolonged by an additional 12 months upon request of the buyer; and
- the transfer of all existing employees of Dansk Fuels to the buyer of the divestment businesses in order to ensure business continuity.
The Commission found that the commitments address the competition concerns identified and concluded that the proposed transaction, as modified by the commitments, would raise no competition concerns. The divestiture will create a national player which is capable of replacing the lost competitive constraint resulting from the transaction both at the national level and at the local level. The decision is conditional upon full compliance with the commitments.
The transaction was notified to the Commission on 4 February 2016.
Companies and products
SFR operates in Denmark under the Statoil brand and is ultimately controlled by Canadian company Alimentation Couche-Tard ("ACT"). ACT is a leader in the convenience store industry and has a global network of convenience stores and service stations. ACT is present in North America, Europe and Asia. SFR undertakes three categories of activities in Denmark: retail sale of motor fuels, commercial or wholesale of motor fuels and convenience retail sale of daily consumer goods and lubricants.
Dansk Fuels comprises Shell's retail and non-retail sale of motor fuels and aviation fuels business in Denmark.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). This deadline is extended to 35 working days in case remedies are submitted by the parties, such as in this case.