Investigation of OMV-MOL deal by European Commission?

04-Mar-08
In view of transmission networks and petrochemicals, the European Commission plans to open an in-depth competition investigation of Austrian oil and gas group OMV's bid to take over Hungarian peer MOL. MOL BU has resisted the takeover since the summer of 2007, when OMV first indicated its plans. OMV has asked the Commission to clear the bid but EU competition regulators must first verify that the deal would not harm competition.The Commission's deadline is of March 6, when it could open an in-depth review lasting up to 90 working days. Such reviews do not necessarily mean a deal will be forbidden, nor even that it will have conditions attached. The Commission wants to know more about what will happen if the pipelines, storage tanks and other distribution facilities of both companies fall under single ownership. Each company already holds a strong share in its own market and combining them would make the situation even less competitive, MOL has argued. MOL says the geography of the region makes transport of oil and gas difficult because countries there lack sea access, with only the Danube to move barges, far smaller than tankers. That raises the stakes for possession of pipelines, because it is expensive to move oil and oil products by truck or rail. Then the Commission will look at the so-called "vertical" or "upstream-downstream" issue involving the chain that begins with crude oil and winds up with petrochemicals such as gasoline, diesel, home heating oil and aircraft fuel.
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