Price rises fears forces sale of Western Isles Brogan Fuel 21/4/10
The Brogan Fuels business on the Western Isles could be sold off by its new owners Scottish Fuels in an effort to avoid unfair competition concerns in the Hebrides.
Fears of fuel price rises were voiced by islanders when GB Oils -
But the £ 42.5 million merger gives Scottish Fuels monopoly control in the Hebrides where the enlarged group would have accounted for the entire supply of heating oils and transport fuels.
Islanders’ concerns that prices would rise resulted in the Office of Fair Trading launching an investigation.
A fuel supply war between the two firms in the Western Isles had seen prices drop by around 10 pence per litre.
GB Oils has now offered to divest the Brogan oil distribution business on the Western Isle.
In addition it would offer the potential purchaser a fuel storage facility at its marine oil terminal in Stornoway.
The OFT is insisting on agreeing an up-
It said it will refer the case to Competition Commission if the the sell-
Amelia Fletcher, OFT Senior Director for Mergers, said: “The OFT received a large number of complaints regarding the impact of the merger in the Western Isles.
“After a careful investigation, we agreed that there were competition concerns. Once
finalised, we are confident that the divestment package will restore pre-
Brogan’s is a main player in the north of Scotland and had been a significant rival to its new owner. It operates across Scotland and the north of England.
While the OFT probe is continuing GB Oils has agreed not to interfere with Brogans fuel sales to customers, not to influence pricing or poach customers.
It must not integrate Brogans into its own business, not starve it of finance or sell off any assets and has to retain the same distinct management.
Brogans forced Scottish Fuels to lower its prices after shipping road fuel tankers to Lewis and Harris twice weekly and taking advantage of the cheap ferry freight costs through the RET scheme.
It recently established a permanent supply of fuel by using three large storage tanks by an oil depot at Stornoway airport and also planned to challenge its rival in the Uists.
Brogan initially focused on supplying heating oil as well as red and white diesel to the islands. It also did a roaring trade in marine gas for fishing boats.