ISLAMABAD - The Competition Commission of Pakistan (CCP) has approved the acquisition of up to 26.67 percent shares in Pakistan Refinery Limited (PRL) by the Pakistan State Oil (PSO)

PRL produces various refined petroleum products, such as motor gasoline, kerosene, and diesel oil for supply to oil marketing companies.

PSO, on the other hand, is an oil marketing company, engaged in the supply of refined petroleum products to the end consumers.

The approval was given in the form of an Order, under Section 11, read with Section 31 of the Competition Act, 2010

The Act had been passed by a bench, comprising Chairperson Vadiyya Khalil, Member (Cartels & Trade Abuses and Legal) Ikramul Haque Qureshi and Member (OFT & Advocacy) Dr. Shahzad Ansar.

While giving the order, CCP also disposed of a complaint filed by Hascol Petroleum Limited (Hascol) against discontinuation of the supply of refined petroleum products by PRL to PSO's competitors after the acquisition.

The CCP observed that the acquisition of PRL's shares by PSO would not substantially lessen competition in the market.

It was noted that PRL's share in the local refined petroleum product market was around 10 percent, and that local refineries, including PRL, collectively supplied less than 50 percent of the total demand for refined petroleum products in Pakistan, while the rest of the demand was met through imports.

With imports being readily available, the PSO would have no incentive to foreclose the supply of refined petroleum products by PRL to its competitors such as Hascol.

Furthermore, with downstream petroleum industry, regulated by Oil and Gas Regulatory Authority, there is no chance of PSO raising prices for competitors or end consumers. CCP further observed that Hascol's concerns were not acquisition-specific. While disposing of the latter’s complaint and allowing the acquisition, CCP directed both PSO and PRL not to engage in any form of exclusionary conduct, and to continue offering its refined petroleum products to other OMCs, including Hascol on commercially viable and competitive terms.

The CCP cautioned that in the event of any unhealthy behaviour coming to its notice, the parties in question would be proceeded against in accordance with the law.