Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: ACCC clears Shell’s proposed acquisition of BG Group, (Nov 20, 2015)
Organizations Mentioned:BG Group plc | Royal Dutch Shell plc
By Greg Hammond, J.D.
The Australian Competition and Consumer Commission (ACCC) announced yesterday that it will not challenge Royal Dutch Shell’s proposed acquisition of BG Group, finding that the proposed transaction would not be likely to substantially lessen competition in the wholesale natural gas market in Queensland or eastern Australia.
Shell is a global group of energy and petrochemicals companies. Similarly, BG is an international explorer and producer of oil and gas.
In reaching its decision not to challenge the deal, the ACCC considered whether the proposed merger would reduce the supply of gas, or reduce competition to supply gas, by: (1) aligning Shell’s interest in Arrow Energy, of which Shell currently has a 50 percent interest in, with BG’s LNG facilities in Queensland; or (2) removing the potential for competition between Arrow and BG.
“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,” stated ACCC Chairman Rod Sims. He added that “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.”
“The addition of BG’s integrated gas assets in Australia to Shell’s global portfolio is one of the main strategic drivers behind the recommended combination, making ACCC approval a major step forward for the deal,” stated Shell CEO, Ben van Beurden in a press release. “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.”
The proposed transaction must also be approved by China’s competition authority and Australia’s Foreign Investment Review Board. The companies, however, have already received clearance by competition authorities in Brazil, Europe, Japan, Korea, and the United States.
Companies: Royal Dutch Shell plc; BG Group plc
News: AcquisitionsMergers Antitrust