Monopoly Concerns Over Recent PNG Oil Interest Acquisition By ExxonMobil

Independent Consumer and Competition Commission: just want to ensure competition to spur development

PORT MORESBY, Papua New Guinea (The National, July 26, 2016) – The recent acquisition of InterOil by ExxonMobil Corporation may raise competition issues, Independent Consumer and Competition Commission (ICCC) says. 

Commissioner and chief executive Paulus Ain said yesterday that ICCC was aware of last week’s acquisition announcement.

He said the proposed acquisition may raise competition issues under section 69 of the ICCC Act.
“The ICCC aims to prevent  monopolisation that may harm  markets in PNG by reducing competitive tension and thus impeding development,” Ain said in a statement.

“ExxonMobil is the leading joint venture partner and the operator of the PNG LNG,” Ain said.
“If this  proposed  acquisition  proceeds,  it will  give  ExxonMobil  about  36 per cent stake  in  the  Papua  LNG  project  and  other  potential  LNG projects   in  the  acreages  that  lnterOil  has  licence  to.

“These interests would   consolidate ExxonMobil and that will make it a significant stakeholder in the natural gas projects.”

Ain said it was better to safeguard the potential natural gas industry from being monopolised which may shut out possible competition in the future.

ExxonMobil announced on Friday that it was paying US$2.5billion (about K8 billion) for InterOil.
ICCC raised similar concerns when Oil Search  Ltd announced  its proposal to acquire InterOil in May.
“The ICCC requires a proper opportunity to analyse independently the likely effects on competition.  That  can  occur  if  an  application  is  made  to  the  ICCC  either  for  a clearance or authorisation of the proposed acquisition,” Ain said.

“If the  transaction  proceeds  without  a  clearance  or  an  authorisation  from  the  ICCC,  we reserve  our  rights  to  institute  legal  action  in  court  to  challenge  the  acquisition  if  we ultimately  form  a  concluded  view  that  the  acquisition  would  have  some  serious  negative implications on competition.”

Ain said if ExxonMobil acquired InterOil, both ExxonMobil and Oil Search (the joint venture in PNG LNG) would have significant interest in both leading LNG projects.
Among   other  proscribed  anti-competitive  conduct,  the  ICCC  Act  also  prohibits  certain business  acquisitions  deemed  to  produce  anti-competitive  outcome.

“This prohibition   is provided in Section 69 of the ICCC Act. There are serious penalties involved for a breach of Section 69, including injunction, divestitures and ban on management under Section 95. In addition, any aggrieved party has the right to take legal action for damages for any loss or damage caused by the acquirer for alleged contravention of Section 69.”

However,  Ain said that there  were  also  provisions  in  the   Act  for  such  proposed  acquisitions  to  be cleared  or authorised  by the ICCC  under  Sections 81 and  82. 
“If the acquisition is cleared or authorised, the acquisition is protected under the ICCC Act.

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