DCC Energy has recently bought several businesses from Total Downstream UK, and the resulting merger may cause problems for a lot of customers in England and Wales. The Office of Fair Trading (OFT) has referred the issue to the Competition Commission for further investigation into the likelihood that non-bulk customers would be adversely affected due to reduced supplier options.
Two of the businesses in the acquisition are GB Oils and Total Butler; between them they own more than 140 oil depots that supply heating oil, transport fuel etc. to commercial, residential and agricultural customers. Those most affected would be businesses that need a supplier for multiple locations but in a relatively small volume, so that the major oil companies or oil traders would not be a viable option as they deal in bulk transactions to limited sites.
The OFT reports that GB Oils and Total Butler are/were strong competitors for the business of these non-bulk, multiple site customers, and the merger would remove that competition and inevitably raise prices. The option of contracting with a number of different small suppliers in different locales would not be cost effective for these customers, nor would a supplier that subcontracts with others to serve a wider area.
Amelia Fletcher, chief economist at OFT, noted that though there are many oil distributors in the UK, three of the largest in terms of their distribution networks are Watson Fuels and the two involved in the DCC Energy merger. She said there is a lot of concern from customers about reduced competition and higher prices, and that the Competition Commission should have a careful look at the situation.
The OFT has just recently begun an investigation into another proposed acquisition of Seletar Services, an offshore support services company, by GB Oils; that move could also cause a significant loss of competitive options for customers.