Australia Approves Shell-BG Merger

The Australian Competition and Consumer Commission (ACCC) will not oppose the proposed acquisition by Royal Dutch Shell (Shell) of BG Group (BG).

“The ACCC’s view is that the proposed acquisition would be unlikely to substantially lessen competition in the wholesale natural gas market, in either Queensland or eastern Australia more broadly,” ACCC Chairman Rod Sims said in a statement Thursday.

The ACCC considered whether the proposed acquisition would reduce the supply of gas, or reduce competition to supply gas, to domestic customers by aligning Shell’s interest in Arrow Energy with BG’s LNG facilities in Queensland.

“The ACCC concluded that as Arrow is not currently focussed on supplying domestic customers, and appears unlikely to be so in the future, aligning Arrow with an LNG operator would not change competition for the supply of gas to domestic customers,” Sims said.

The ACCC also considered whether the proposed acquisition would be likely to lessen competition for the supply of gas to domestic customers by removing the potential for competition between Arrow and BG.

“While recognising the current high degree of uncertainty about the future development of the industry, the ACCC considers that BG’s focus is on supplying the QCLNG facilities. A key issue was whether, in the absence of the proposed acquisition, BG and Arrow would both have excess gas above their LNG commitments and whether they would offer that gas to domestic customers,” Sims said. “However, there is too much uncertainty about the amount and timing of future gas supplies for the ACCC to be satisfied that Arrow and BG would be meaningful competitors in the domestic market in the absence of the acquisition.”  

In April, Royal Dutch Shell agreed to buy BG Group in a deal close to 47 billion pounds ($70 billion).

Shell said the payment would be combination of stock and cash. For every share held, BG shareholders would get 3.83 pounds in cash and 0.45 Shell B shares.