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Royal Dutch Shell has secured Australian Competition and Consumer Commission (ACCC) approval for its $70bn acquisition of BG Group.

ACCC said that the deal would not change the dynamics of the domestic market.

Prior to announcing its decision, the watchdog considered whether the deal would minimise the gas supply, or reduce competition to supply gas to domestic customers by aligning Shell’s interest in Arrow Energy with the Queensland LNG facilities of BG Group.

ACCC chairman Rod Sims said: "The ACCC’s view is that the proposed acquisition would be unlikely to substantially lessen competition in the wholesale natural gas market, in either Queensland or eastern Australia more broadly."

"The ACCC concluded that as Arrow is not currently focussed on supplying domestic customers, and appears unlikely to be so in the future, aligning Arrow with an LNG operator would not change competition for the supply of gas to domestic customers."

Further, the ACCC considered whether the proposed acquisition would be likely to decrease competition for the supply of gas to domestic customers.

"The ACCC’s view is that the proposed acquisition would be unlikely to substantially lessen competition."

"A key issue was whether, in the absence of the proposed acquisition, BG and Arrow would both have excess gas above their LNG commitments and whether they would offer that gas to domestic customers." Sims added.

While performing the review, the ACCC obtained various submissions from market participants who were worried with regard to the competition effects of the proposed acquisition.

The proposed acquisition will also require approval from China’s competition authority and Australia’s Foreign Investment Review Board.

In September, the European Commission cleared the deal saying that it would not give Shell market power to benefit in sectors such as oil and gas exploration, liquefaction of gas and the wholesale supply of liquefied natural gas.


Image: Royal Dutch Shell head office, Carel van Bylandtlaan, The Hague. Photo: courtesy of PL van Till.