Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: EC approves acquisition of BG Group by Royal Dutch Shell, (Sep 2, 2015)

By Linda O’Brien, J.D., LL.M.

The European Commission (EC) has approved under the European Union (EU) merger regulation the acquisition of BG Group by Royal Dutch Shell, the EC announced today. The EC determined that the takeover would not lead to Shell benefiting from market power in a number of markets, namely oil and gas exploration, the liquefaction of gas, and the wholesale supply of liquefied natural gas (LNG). The Commission was notified of the transaction on July 29.

Headquartered in the Netherlands, Royal Dutch Shell is a global group of energy and petrochemical companies with business activities including oil and gas exploration, production and marketing; manufacturing, marketing and shipping of oil products and chemicals; and renewable energy products.

BG Group, is a British multinational oil and gas company headquartered in Reading, United Kingdom. The company has two principal business areas—the upstream gas business segment, which covers exploration and production activities plus liquefaction operations associated with integrated LNG projects, and the LNG shipping and marketing business.

The EC focused its investigation on the markets where the activities of Shell and BG Group overlap, namely in the exploration for oil and gas reserves, the supply of natural gas and the liquefaction and supply of LNG.

The Commission found that, after the transaction, the merged entity's market share would remain limited in the exploration for oil and gas reserves, the liquefaction of LNG, and the wholesale supply of LNG. Moreover, a number of strong competitors would remain active in these markets after the merger. The EC determined that the takeover would not allow Shell to influence prices and that these markets would remain competitive after the transaction.

Moreover, the EC found that Shell and BG Group would be unlikely to prevent competitors from accessing some of Shell's LNG liquefaction facilities used to supply LNG into the EEA or from its natural gas transportation and processing infrastructure in the North Sea. This is mainly because significant additional liquefaction capacity is being built and will come on-stream in the near future, while significant spare oil and gas transport and processing capacity exists in the North Sea region. Therefore, the Commission concluded that the transaction would not raise competition concerns.

Companies: BG Group plc; Royal Dutch Shell plc

News: AcquisitionsMergers Antitrust