07/14/2020 | Press release | Distributed by Public on 07/14/2020 05:09
The European Commission has approved, under the EU Merger Regulation, the acquisition of Grupa Lotos by PKN Orlen. The approval is conditional on full compliance with a commitments package offered by PKN Orlen.
Executive Vice President Margrethe Vestager, in charge of competition policy, said: 'Access to fuels at competitive prices is important for businesses and consumers alike. Today, we can approve the proposed acquisition of Lotos by PKN Orlen because the extensive commitments offered by PKN Orlen will ensure that the relevant Polish markets remain open and competitive and that the merger will not lead to higher prices or less choice for fuels and related products for businesses and consumers in Poland and Czechia.'
Today's decision follows an in-depth investigation of the proposed merger by the Commission, which combines PKN Orlen and Grupa Lotos ('Lotos'), two large Polish integrated oil and gas companies. They are both active in Poland, where they both own refineries, and also have activities in several other Central and Eastern European and Baltic countries.
The Commission's investigation
During its in-depth investigation, the Commission gathered extensive information and feedback from competitors and customers of the merging companies.
Following its investigation, the Commission had concerns that the transaction, as initially notified, would have harmed competition, in particular in the following markets:
The proposed remedies
To address the Commission's concerns, PKN Orlen offered the following commitments:
The Commission found that the combination of divestitures and other commitments would enable the purchasers of the divested businesses, as well as other competitors, to compete effectively with the merged entity in the relevant markets in the future. In the wholesale diesel and gasoline markets in particular, the purchaser of the stake in the refinery will be able to import significant volumes thanks to greater access to infrastructure. Through this combination of refining capacity and import potential, the purchaser will exert a competitive constraint similar to that of Lotos before the transaction.
The Commission therefore concluded that the transaction, as modified by the commitments, would no longer raise competition concerns. This decision is conditional upon the full compliance with the commitments.
Companies and products
PKN Orlen is a Polish integrated oil and gas company. It owns one of the two refineries existing in Poland as well as refineries in Lithuania and Czechia. PKN Orlen is active on the wholesale and retail markets for refined oil products in Poland, Austria, Czechia, Estonia, Germany, Latvia, Lithuania and Slovakia. It also has activities in the upstream exploration, development and production of crude oil and natural gas. In addition, PKN Orlen is active in the petrochemicals market.
Grupa Lotos is a Polish integrated oil and gas company. It owns the only other Polish refinery. Lotos is active on the wholesale and retail markets for refined oil products, mostly in Poland but also in Czechia, Estonia, Latvia, Lithuania andSlovakia. Like PKN Orlen, it is also active in the upstream exploration, development and production of crude oil and natural gas. In addition, Lotos is active in the petrochemicals market.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
There are currently six on-going Phase II merger investigations: the proposed acquisition of Transat by Air Canada; the proposed acquisition of GrandVision by EssilorLuxottica, the proposed acquisition of DSME by HHiH, the proposed acquisition of Chantiers de l'Atlantique by Fincantieri, the proposed merger of Fiat Chrysler Automobiles and Peugeot, and the proposed acquisition of Refinitiv by London Stock Exchange Group.