The competition watchdog has raised concerns the proposed sale by Wesfarmers of its east-coast LPG business to competitor Elgas could leave customers vulnerable to price increases.
The Australian Competition and Consumer Commission says the proposed acquisition could lead to further concentration in a market where there is already little competition, potentially driving prices up.
The competition watchdog today released a statement of issues outlining its concerns, calling for comment from interested parties as it prepares to make its decision on the deal.
In some regional areas, the only distributors are Elgas and Kleenheat or dealers supplied exclusively by them.
“The ACCC’s preliminary view is that the proposed acquisition raises significant competition issues for the distribution of LPG to customers in a number of different markets,” ACCC chairman Rod Sims said.
“The ACCC is concerned that the proposed acquisition would leave customers vulnerable to price increases."
LPG's non-automotive uses include hot water systems, heaters, gas stoves and portable generators.
The ACCC will make its final decision on the transaction next month.