CCP Grants Exemption for Aramco and GO Petroleum Deal

CCP Grants Exemption for Aramco and GO Petroleum Deal

Islamabad, May 21, 2024 – The Competition Commission of Pakistan (CCP) has granted a time-bound exemption on specific clauses of a product supply agreement between Aramco Trading (ATC) Fujairah FZE Ltd and Gas and Oil Pakistan Ltd (GO Petroleum).

This exemption allows for the importation and sale of gasoline and diesel products to Pakistan, the CCP announced on Tuesday.

Aramco Trading Company, based in Fujairah, UAE, is one of the world’s largest integrated energy and chemical companies. Gas and Oil Pakistan Limited, a registered Oil Marketing Company (OMC) in Pakistan, operates a network of retail outlets selling petrol, diesel, and lubricants across the country.

The agreement stipulates that ATC Fujairah will meet GO Petroleum’s demand for essential petroleum products, primarily gasoline and diesel, for its retail network. The parties involved submitted to the CCP that this arrangement aims to achieve economies of scale in procurement for GO Petroleum, which could potentially lead to better pricing for Pakistani consumers.

The exemption sought was primarily for the exclusivity clauses within the commercial agreement, which involve supplying 100% of the imported products demanded by GO Petroleum’s retail outlets.

In its review, the CCP considered several factors, including how the agreement would enhance GO Petroleum’s distribution network and the resultant benefits for consumers. The commission also sought information on the status of approvals from relevant regulators concerning fuel stations, terminals, and storage depots.

The CCP evaluated the synergy between GO Petroleum and ATC Fujairah, focusing on the potential economic benefits and how the agreement might enhance competition in the relevant market. The commission grants such exemptions under Section 9 of the Competition Act, 2010, ensuring that the economic benefits outweigh any anti-competitive effects, thereby promoting economic progress for consumers through improved production and distribution.

The CCP has granted the exemption with specific conditions. Both parties are required to refrain from engaging in anti-competitive activities, and the exemption does not cover any pricing terms and mechanisms related to the products. Additionally, the agreement includes certain off-specification products, for which the approval of the concerned sector regulator must be ensured for import and sale. The applicants are also directed to secure necessary approvals for their terminals and storage facilities from relevant authorities to execute this agreement.

The exemption is valid until June 2026. For any extension, both parties must approach the CCP with detailed submissions, highlighting the benefits that have accrued from the improved distribution network of petroleum products and enhanced market competition.

This decision by the CCP underscores its commitment to facilitating economic progress and ensuring that the benefits of such commercial agreements are passed on to consumers, while also maintaining a competitive market environment.