The proposed Sasol-Engen fuels division merger should not be allowed to go ahead, the Democratic Alliance said on Sunday.
”If it does, it will have undeniably negative consequences for the economy as a whole as well as the ordinary consumer for many years ahead,” DA minerals and energy spokesperson, advocate Hendrik Schmidt, said in a statement.
The DA welcomed the Competition Commission’s change of position on the proposed merger.
”Up until now the Competition Commission had supported the deal on the condition that the merged entity sell off part of its refining capacity and make other concessions,” said Schmidt.
”The DA has opposed the deal on the basis of the fact that it would significantly increase the concentration of the liquid fuels industry and that this would translate into lower competition and higher prices for consumers should the industry be deregulated at some point in the future.”
There were also concerns that Uhambo may abuse its control of inland refining capacity to restrict supply to its competitors, he said.
”The Competition Commission now acknowledges that government is unlikely to have the capacity to act timeously against anti-competitive behaviour should the need arise.
”South Africa’s experience with the telecommunications sector demonstrates that regulation is a poor substitute for real competition.”
Allowing this merger to go ahead would be at odds with the Department of Trade and Industry’s efforts to clamp down on abuse of market power in other area’s of the economy — more specifically, the use of import parity pricing where market conditions do not justify this. – Sapa