The Competition Commission has demanded that energy giant Vitol increase the number of fuel stations owned by historically disadvantaged people as part of an array of conditions it imposed on it in its pursuit to buy a controlling stake in Engen.
The competition tsar this week recommended that the Competition Tribunal approve the deal that will see Vivo, a unit of the Swiss-based Dutch multinational energy group, Vitol, buy a 74% stake in Engen from Petronas.
Engen has about 1 300 service stations in seven African countries and is part of the Malaysian oil and gas group, Petronas.
Vivo, a unit of Vitol Group, has more than 2 600 service stations across 23 African countries and uses the Engen and Shell brands.
Former MTN boss Phuthuma Nhleko’s Phembani Group, a long-standing Petronas partner in Africa and Engen’s BEE shareholder, will continue its association with Engen and will retain its 21% of the South African business.
Another condition put forward by the commission is that the merged entity must increase levels of localisation across the value chain, develop historically disadvantaged persons-owned suppliers, establish a new employee share-ownership plan for the merged entity’s employees in South Africa and put a moratorium on merger-specific retrenchments.
The commission watchdog said the proposed merger raised significant competition and public interest concerns, hence the conditions attached to the deal, to get its approval.
“In South Africa, the Engen Group imports, supplies, and distributes refined petroleum products to the retail market. It also earns revenue from retail convenience services provided at these service stations. The Engen Group also provides refined petroleum products to resellers and large customers through its commercial division,” the commission said.
“The division also blends lubricants to create refined petroleum products which are supplied to its retail and commercial customers and distributors. It exports its products to Namibia, Botswana, Eswatini and Lesotho.”
This deal comes as the local industry faces a shortage of refineries, with the country increasingly reliant on imports. Supply line disruptions are at risk, as highlighted by the Transnet strike last year, which affected operations at the Durban port.
In another deal, the commission unconditionally approved the transaction that will see Aspen Pharmacare buy the promotion, sales and distribution rights relating to 23 pharmaceutical products supplied in South Africa, by Lilly SA. The $41.5-million deal was first announced in August.
“The commission found that the proposed transaction is unlikely to result in substantial prevention or lessening of competition in any relevant markets. The commission further found that the proposed transaction does not raise any substantial public interest concerns,” it said.
