The European Commission(“Commission”) has opened an in-depth investigation about the planned acquisition of Grupa Lotos by PKN Orlen, the Poland-based and vertically integrated fuel and gas companies.
Commission’s competition concerns are as such:
- Regarding the wholesale supply of fuels (both from the refinery and inter-wholesaler trade), a monopoly will be formed in the market after the transaction as the parties are the only 2 undertakings with refinery in Poland. Import that is the only alternative for supply is limited due to significant barriers such as lack of storage and infrastructure and, restrictive regulations,
- Regarding the wholesale supply of jet fuel, the new entity will be the market leader in the Czechia and only supplier in the Poland and Estonia.
- Regarding the retail supply of fuel, the transaction is expected to lessen the competition as two largest market players merge and the new entity will be four times larger than the closest competitor,
- Regarding the retail supply of jet fuel, the new entity will be the only seller of most of the airports.
- As for the by-products (tar, oil), PKN Orlen’s market power is expected to increase in Poland, Czechia, Lithuania, Slovakia, Latvia and Estonia,
- In addition, competition concerns regarding the provision of mandatory storage services will arise since PKN Orlen and Grupa Lotos account for a large share of the storage available in Poland,
- And finally, the competitors in the downstream markets could be pushed out of the market by stopping supply.
Above mentioned concerns resulted in second phase investigation of the transaction. The Commission is expected to take its final decision in mid-December.
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