OTTAWA -- "To protect consumers from higher gasoline prices," the federal Competition Bureau in Canada is challenging Parkland Fuel Corp.'s acquisition of Pioneer Energy gas stations or supply contracts in 14 communities in Ontario and Manitoba.
Parkland is seeking to acquire 181 Pioneer corporate gas stations and 212 supply agreements in Ontario and Manitoba for $378 million (Canadian; $344.2 million U.S.).
The communities in Ontario are Aberfoyle, Allanburg, Bancroft, Chelmsford/Azilda, Gananoque, Hanover, Innisfil, Kapuskasing, Port Perry, Tillsonburg and Welland; the communities in Manitoba are Lundar, Neepawa and Warren.
The bureau's review concluded that the parties' post-transaction market shares in these communities would be between 39% and 100%. As these markets become more concentrated, the likelihood of price coordination between remaining retailers increases.
The bureau will also be seeking an injunction requiring that Parkland preserve and operate independently the assets to be acquired from Pioneer in these communities until the tribunal reaches its decision in this matter.
Over the years, the bureau has taken action in the gasoline and other petroleum products industry, including prosecutions for price fixing, a merger review that resulted in the sale of many gas stations, as well as interventions before regulatory boards.
"Taking action in this matter demonstrates the bureau's ongoing vigilance when it comes to the sale of retail gasoline," it said. "Our review concluded that Parkland's acquisition of Pioneer could harm competition in the retail gasoline industry in certain communities in Ontario and Manitoba. As we were not able to come to an agreement with Parkland and Pioneer to resolve our concerns, we are seeking to block the merger in these communities in order to protect competition for Canadians."
Parkland intends to "vigorously contest" the ruling. In a statement, it said, "Since announcement on September 17, 2014, the acquisition has been the subject of bureau review for close to seven months. During this period, Parkland has productively engaged with the bureau and prior to being served with the Application, advised the bureau of its intention to dispose of assets in most of the affected markets; however, Parkland and the bureau differ on a significant matter of principle regarding the assets … which are a mix of company and independent dealer-operated assets."
The company said it was "surprised" by the challenge "since Parkland had previously proposed to the bureau that it would sell certain of the assets … in order to mitigate anti-competitive impacts perceived by the bureau. Parkland believes that the acquisition will be beneficial to consumers and result in additional efficiencies in the marketplace being realized," said Bob Espey, president and CEO of Parkland.
Red Deer, Alberta-based Parkland operates or supplies close to 700 gas stations and convenience stores in Canada under the Fas Gas Plus, Race Trac Gas and Esso brands.
Pioneer, based in Burlington, Ont., operates gas stations and c-stores under the Pioneer, Esso and Top Valu brands
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.