Sinopec has agreed to buy Chevron SA for $900m. Picture: BOBBY/YIP REUTERS
Sinopec has agreed to buy Chevron SA for $900m. Picture: BOBBY/YIP REUTERS

Chevron’s branded marketers took aim at Chinese oil giant Sinopec at the Competition Tribunal on Thursday, accusing Sinopec of failing to engage with the marketers on its plans for Chevron SA, which Sinopec has agreed to buy for $900m.

The 10 marketers, who are black-controlled "mini oil companies" that account for 60% of the volume of fuel sold by Chevron SA under its Caltex brand, said "other parties" had engaged with them extensively — suggesting they have been in talks with the BEE consortium led by Mashudu Ramano which owns 25% of Chevron SA.

The consortium is exercising its pre-emptive right to buy the rest of Chevron SA, backed by Glencore.

The commission has recommended the Sinopec bid for Chevron SA be approved with a series of public interest conditions, which were negotiated between Sinopec and Economic Development Minister Ebrahim Patel. However, even assuming the tribunal approves the deal, it would still go ahead only if the rival Ramano/Glencore bids were withdrawn or failed to receive approval.

The consortium’s proposed acquisition of Chevron has been referred to the commission. It would have to look separately at the deal in which Glencore buys the stake from the consortium.

The branded marketers are concerned about the costs and consequences of rebranding their filling stations from Caltex to Sinopec and about whether the 15-year contracts they have with Chevron SA will be renewed under the new owners once those contracts expire in 2026-27. They asked that the tribunal impose a series of extra conditions on the deal to protect them, including that their contracts be renewed on the same terms for a further 15 years.

Counsel for the Competition Commission Maya Swart said the commission had analysed the branded marketers’ submission but had concluded that their possible exit from the market eight or nine years from now would not significantly lessen competition in the market.

But Caltex Northern Cape Marketer MD Fuad Johnson said Sinopec and Chevron SA had not shown the branded marketers respect; had not engaged with them, except for one town hall meeting; and had not shared their strategy or plans with the marketers, who were a substantial partner of Chevron SA.

The branded marketers were fearful and concerned and "the fact of the matter is that other parties have engaged and have shared their plans".

The director of Caltex Eastern Cape Marketer, Clive Berlyn, said the marketers were Chevron SA’s "low-cost carrier on the route to market", who were able to get fuel to filling stations in outlying areas and had taken Chevron from number four to number two in SA since Chevron’s branded marketer model was implemented in 2005.

Though tribunal member Enver Daniels accused the marketers of xenophobia against a Chinese firm, Berlyn said their concern about the "degradation" of the brand was based on a survey on market perceptions.

Members of the tribunal and counsel for the merging parties suggested the conditions should include an undertaking by Sinopec to engage with the marketers if the deal went ahead.

joffeh@businesslive.co.za

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