SOL’s bid blocked
Regional petroleum company Sol’s US$100 million attempt to buy the state-owned oil terminal has been halted.
The Fair Trading Commission (FTC) has ruled against Simpson Oil Limited’s (Sol) plans to acquire the Barbados National Terminal Company Ltd (BNTCL), stating the company would have to agree to some hefty restrictions.
In the four-page, thousand-word document, released after months of analysing the proposed acquisition of the state-owned agency from the Sir Kyffin Simpson-led Sol, the regulatory body found the proposed merger to be anticompetitive and likely to bolster Sol’s position in the market.
“In light of the foregoing, the commission has determined that the merger as currently structured and presented to it does not qualify to be permitted under Section 20 of the FCA . . . . The commission is of the view that there are no available behavioural remedies which would adequately address the anticompetitive concerns in the transaction as currently structured.
“As such, the commission cannot but decide against his proposed merger transaction,” the ruling stated.
The FTC ruled that it would assess any substantially altered transaction, including a relevant amended agreement, which may be placed before it.
The regulatory body noted it was not challenging the Government’s plan to have the parent company, BNOCL, divest its interest in the BNTCL and explained it considered all of the information submitted in order to determine the likely impact of the transaction on competition.
The commission identified four major issues with the proposed multimillion-dollar transaction: The vertical alignment of the upstream and downstream markets, an increase in throughput fees, the planned 15-year moratorium on the construction of any new terminal facilities and the absence of any real efficiencies the deal would introduce to the market.
While against the merger in its current form, however, the FTC determined that three conditions had to be met before it could give it approval on the deal.
The body mandated that the vertical alignment issues be addressed, the moratorium on both the construction of new facilities and the issuing of fuel licenses be removed, a 32 per cent increase in throughput fees be added and also that SOL or any of its affiliates did not acquire an exclusive right of importation of oil products into Barbados.
Last night SOL responded that it respected the FTC’s investigative process “and now that we have received a final ruling, we will issue a further statement upon conclusion of our internal review process”.
“As always, our commitment to Barbados remains steadfast and we will continue to look for ways to respond to the needs of our valued stakeholders – the Barbadian people,” the brief release stated.
Government had expected the sale of the BNTCL, which manages the importation and supply of gasoline, diesel and fuel oil, to inject much needed money into the economy.
Initially, rival RUBIS went to court and secured an interim injunction blocking the sale on the grounds that it would create a monopoly. Subsequently the FTC announced it was investigating the matter.
Yesterday, Minister of Industry Donville Inniss told the MIDWEEK NATION the most important responses to the ruling ought to come from the parties before the FTC and not the minister with responsibility for the FTC.
“The shareholders of BNTCL decided to dispose of the asset. It went tAo tender and the shareholder agreed to the offer made by Sol . . . The sale/purchase agreement had to be approved by the FTC, which is an independent body.
“Having made its ruling, I would assume it is entirely up to the applicants before the FTC to determine if they are prepared to accept the ruling of the FTC,” he said.
Barbados Consumer Research Association (BCRA) director general Malcolm Gibbs-Taitt described the decision as “good news”.
He did not agree with Government’s decision to sell the BNOCL subsidiary.
“There is no sensible reason why the Government should sell BNTCL, anyways . . . . The idea that you would get 100 million to boost up the foreign reserves is foolishness because you’re talking about what? Two month’s money?” he questioned. (AD)