AdC clears the acquisition of Repsol’s LPG business in Madeira and Azores by Rubis, subject to conditions

​Press Release 14/2018
 
AdC clears the acquisition of Repsol’s LPG business in Madeira and Azores by Rubis, subject to conditions
 
The Portuguese Competition Authority (AdC) has accepted the divesture commitments brought forth by Rubis II Distribuição Portugal, and hence has approved Rubis’ acquisition of the existing liquefied petroleum gas (LPG) business of Repsol Gás Portugal in the two Autonomous Regions of Portugal - Madeira and Azores.
 
Several competition concerns were raised by the AdC as a result of the proposed transaction, mainly because the merger would further increase concentration in the already highly concentrated LPG markets (notably, the proposed merger would have reduced the number of LPG players in most of the islands of the archipelago of Madeira and Azores from three to only two). This scenario would be harmful for consumers, as it could result in higher prices or hindered product quality and service levels.
 
In its prior decision to initiate second phase proceedings, the AdC had identified significant barriers to entry and expansion in these markets, regarding, namely, the access to existing storage infrastructures, the transport of the LPG from the mainland to the islands, the existing distribution contracts, entry and switching costs, and the relatively small size of the markets under analysis.
 
According to the in-depth investigation led by the AdC, these aspects would significantly impede the entry of new operators in the islands, unless such entry resulted from the acquisition of an existing market player.
 
Subsequently, Rubis submitted a set of commitments, aimed at addressing the competition concerns raised by the AdC, which encase, amongst others, the divestment to a suitable purchaser of a portion of the business that was part of the proposed transaction. Therefore, these commitments ensure the presence of a third alternative LPG supplier, and that the existing market structure is maintained.
 
The merger had been notified to the AdC on the 21st of September 2017. On the basis of its preliminary investigation, the AdC found that Rubis’ acquisition of the existing LPG business of Repsol in Madeira and Azores could pose a significant impediment to effective competition in these markets and adopted a decision to initiate second phase proceedings on the 22nd of January 2018.
 
The commitments ultimately submitted by the notifying party, by ensuring that a new player operates in the LPG markets, and, consequently, that the existing market structure is for the most part preserved, were considered sufficient, proportional and suitable to address the competition concerns raised by the AdC.
 
The commitments will be monitored by the AdC.
 
 27 September 2018