The Independent Consumer and Competition Commission (ICCC) has given clearance to Santos Limited to proceed with its proposed acquisition of Oil Search Ltd.
ICCC Commissioner and CEO, Paulus Ain said after taking into consideration Santos’ authorization application and submissions including comments from relevant stakeholders and available market information. ICCC notes that the acquisition of Oil Search by Santos will not seriously harm competition in any markets in PNG.
Mr Ain stated that it was important to state in the beginning the relevant law and the requirements of the law that the ICCC applied when making its decision and that this would help the public to appreciate the decision of the ICCC, which is also based on its findings.
He said Section 81 of the ICCC Act requires that the ICCC must be notified of a proposed merger or acquisition if it would cross either of the two mandatory notification thresholds being:
a) If the transaction value of the proposed merger or acquisition exceeds K50 million or
b) If the proposed merger or acquisition is likely to result in a market share increase of 50 percent or more of the acquirer.
“This particular transaction crosses the transaction value threshold; hence Santos has rightfully notified the ICCC,” Mr Ain added.
The Commissioner further explained that once an authorization notification is lodged with the ICCC, the law requires that the ICCC must grant the authorization permitting the transaction to proceed, if it is satisfied that-
1. The acquisition will not have the effect, or will not be likely to have the effect, of substantially lessening competition in a market, or
2. Although the acquisition will have the effect of substantially lessening competition in a market, it will result in net public benefit.
If either of the above are not satisfied, the ICCC must decline to authorize the acquisition.
“The law also states that if the first requirement is met, then it is not necessary for the ICCC to make assessments on the second requirement (on net public benefit). In such instances, a clearance must be granted under the authorization process.”
Mr Ain said the ICCC was satisfied that the Proposed Acquisition will not have, or will not be likely to have, the effect of substantially lessening competition in any market in PNG; hence this passes the first requirement.
Therefore, the ICCC gave a Clearance for the proposed acquisition to proceed.
“The reason for this conclusion was that while Santos does not operate any major projects in PNG, it does have interests in various oil and gas projects in PNG and this is through joint venture arrangements.
“On the other hand, Oil Search has physical presence in PNG and operates various oil and gas projects and produces associated gases (natural gas) and crude oil from its oil fields.”
For Santos, there is no information suggesting that it does produce natural gas and/or crude oil in PNG. ICCC states that is also no information suggesting that Santos directly competes with Oil Search in any projects in PNG.
“Therefore, ICCC considered that there is no real overlap in the business activities of Santos and Oil Search that can possibly raise any serious competition concerns in any markets in PNG if this acquisition proceeds.”
Mr Ain added that while this proposed acquisition is a huge transaction (in terms of monetary value), as far as the ICCC Act is concerned, it has satisfied the Clearance Test.
The ICCC, therefore, gave Clearance on 7th December, 2021 for the proposed acquisition to proceed.
Meantime, Oil Search Ltd said yesterday, Tuesday 7th December that its A$8.8 billion ($6.21 billion) buyout by Santos Ltd received an overwhelming support from its shareholders, getting over 95 percent votes in favour of the deal.