The European Commission has opened an in-depth investigation into the proposed acquisition of the Polish integrated oil and gas company Lotos by its rival PKN Orlen, considering that the merger may reduce competition in fuels supply in Poland and in neighbouring countries. It will take a decision on the transaction by 13 December 2019.
The two companies are mostly operating in Poland, where they own and operate the only two refineries in operation, but are also active in Baltic countries. They are active across the whole value chain of fuels supply, including wholesale and retail supply of fuels, the related markets of by-products of the refining process and the provision of associated services (mandatory storage).
The European Commission is concerned that the proposed merger would create a quasi-monopoly for the wholesale supply of fuels (sole supplier of products at ex-refinery level), with imports as the only potential alternative (but limited due to regulatory requirement and a lack of infrastructures). With the merger, the newly created company would be four times larger than the next competitor in the retail supply of fuels. Moreover, it would have the ability and incentive to stop supplying its downstream rivals.
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