Business and Finance

The federal Competition Bureau says Suncor Energy Inc. can go ahead with its acquisition of Petro-Canada, but only if it divests 104 retail gas stations in southern Ontario and sells off its storage and distribution network in the Greater Toronto Area.

Suncor has agreed to the conditions. The bureau said it was concerned that the merger would lessen competition "substantially" in the region and could have led to increased gasoline prices.

"Requiring the companies to sell retail outlets will lead to increased competition by independent retailers who can expand their market presence," said interim competition commissioner Melanie Aitken, in a statement.

"In addition, the parties’ commitment to sell terminal space in the Greater Toronto Area is important to promoting a competitive dynamic in that market."

Both companies have committed to selling about 1.1 billion litres of annual terminal storage and distribution capacity, which will be used for wholesale distribution during a 10-year period at their terminals located in the GTA.

The merged company, according to the agency, must also supply 98 million litres of gasoline each year, for 10 years, to independent gasoline marketers quick cash loans.

"On the surface this looks like a fair condition," said Jane Savage, president and chief executive of the Canadian Independent Petroleum Marketers Association.

"It means some other player will be there at the wholesale level. For the buying public, this is very important because wholesale prices underpin retail prices."

Suncor proposed to acquire Petro-Canada in March for $19.1 billion. The deal is the largest in the history of Canada’s oil industry and would create a new "made in Canada" company valued at more than $45 billion and capable of producing the equivalent of 683,000 barrels of oil a day.

But on the retail side it would have given the company an Ontario network of more than 700 retail stations, of which 104 will now have to be divested.

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