Viva Energy’s OTR Group acquisition approved by ACCC with conditions

The Australian Competition and Consumer Commission (ACCC) has announced it will not oppose Viva Energy Australia’s proposed acquisition of the OTR Group, subject to a divestiture condition. Announced in April 2023, the transaction is valued at AUD1.15 billion (USD770 million). The proposed acquisition includes 184 OTR retail fuel sites across Australia.

Viva Energy, a prominent fuel supply chain operator in Australia, including Coles Express convenience sites, expects to complete the acquisition of OTR Group in the first half of 2024, subject to Foreign Investment Review Board approval.

OTR Group, primarily operating in South Australia, holds the largest retail fuel network in the state, with additional locations in other states and territories, including the Northern Territory under the Puma brand. The group supplies wholesale fuels and distribution services to commercial customers and independent retail fuel sites. Viva Energy plans to expand the OTR brand to other states following the acquisition.

The ACCC’s review focused on the overlap between OTR Group and Viva Energy, particularly in South Australia and the Northern Territory, assessing competition effects at both retail and wholesale levels.
ACCC Commissioner Stephen Ridgeway expressed concerns that without divestiture, the acquisition would significantly enhance Viva Energy’s network size, potentially affecting competition and consumer choice in Adelaide and Ceduna. Initially, Viva Energy offered to divest 23 of its 32 Adelaide retail sites. However, this number increased to 25 (24 in Adelaide and one in Ceduna) in response to ACCC’s concerns.

Chevron has been proposed as the upfront purchaser for the divestiture sites, a decision approved by the ACCC following consultation. Chevron’s global presence as a fuel producer, importer, wholesaler, and retailer positions it well for expansion into South Australia. The ACCC considered Chevron’s experience in the Australian fuel industry, financial capability, and plans to maintain and operate the 25 divestiture sites.
In exchange for the divestiture sites, Viva Energy will receive 13 Chevron sites located in Queensland, New South Wales, and Western Australia. The ACCC believes that Viva Energy’s undertaking will create a viable, independent competitor in the market, preventing substantial lessening of competition.

The ACCC also closely examined potential effects on wholesale fuel supply, including Viva Energy supplying the extensive OTR Group network in South Australia. The transaction’s completion, subject to regulatory approval, is expected in 2023. The business will continue its regular operations during this period.

Viva Energy recently introduced the ‘Reddy Express’ brand, set to gradually replace Coles Express and operate alongside the OTR offer. Viva Energy is also the exclusive supplier of Shell-branded fuels and lubricants in Australia.

Chevron Corporation, a global energy company listed on the New York Stock Exchange (NYSE:CVX), operates in more than 180 countries, including Australia. In Australia, Chevron operates under the Caltex and Puma brands, with one Puma brand site in Port Augusta, South Australia.

The acquisition will merge the entities’ retail fuel, wholesale fuel, and retail convenience and grocery offerings, marking a significant development in Australia’s fuel and convenience retail sector.