The France-based petroleum company Rubis has hailed as a victory for Barbadian consumers, a ruling by the Fair Trading Commission (FTC) halting the planned sale of the Barbados National Terminal Company Limited (BNTCL) to the Sol Group.
It emerged over the weekend that the FTC had issued a preliminary ruling dated June 14, rejecting the US$100 million sale of the BNTCL, owned by the Barbados National Oil Co Ltd (BNOCT), on the grounds that portions of the January 31 deal was essentially unlawful, particularly a controversial 15-year moratorium on construction of new terminal facilities or new import depots.
Rubis, which had lodged an unsuccessful bid for the terminal company, had contended the moratorium in effect gave the Sir Kyffin Simpson-led Sol a monopoly on the petroleum market here.
Back in January, BNOCL had revealed that it had signed an agreement with the Sol Group for the sale of BNTCL, a move that was vehemently opposed Rubis and resulted in a legal challenge by Sol’s lone competitor in the market.
“It is a preliminary ruling but it is a preliminary ruling against the transaction and I am really glad that the FTC has seen the negative effects of this transaction in the sense that it would not be good for competition and it would not be good for consumers,” Chief Executive Officer of Rubis West Indies Mauricio Nicholls told Barbados TODAY in an interview this morning.
Had the merger been approved, BNOCL would continue to source, import, own and distribute gasoline, diesel and fuel oil to all local marketers, the state entity had assured.
It had also said the sale to the Sol Group did not mean the petroleum prices would rise.
Although the announcement of the planned sale had the support of the Barbados Chamber of Commerce and Industry and the Barbados Renewable Energy Association, the deal had met with resistance from several persons and institutions of interest.
Among those who formally objected to the FTC were the fledgling Barbados Integrity Movement and the Clement Payne Movement, both of which claimed the merger would violate a long-standing state-moderated anti-monopoly policy in the fuel distribution and retail sector.
But it was Rubis which was most aggressive, obtaining a court injunction to stop the deal, even as the FTC carried out its probe.
In its preliminary ruling, the regulatory body also rejected Sol’s call for a 32 per cent pre-sale increase in throughput fees at the Fairy Valley storage site, arguing the costs would likely be passed onto consumers.
“We are very happy about that and the FTC has understood all of the legal implications the transaction would have and based on that they decided to make a preliminary decision to reject the transaction,” Nicholls emphasized.
However, the Rubis chief executive would not say what the ruling meant for his company, preferring to await formal notification.
“We have not received any official notification from the FTC and I have not seen a draft of the ruling. So we expect to receive that in a couple of days and then maybe after that we can understand all of the details and what it means for us,” Nicholls explained.
In addition to the legal challenge, Rubis had threatened to trigger the articles of a bilateral investment treaty between the United Kingdom and Barbados to ensure the sale did not go through.
With the FTC decision, Nicholls said a determination would be made on the way forward after Rubis examines the details of the ruling.
“We have to take things one at time, we have to see what the document says. You have to understand that we have to see if this is just a preliminary ruling and if it is a final ruling then we have to understand the details before we decide on any future actions. So it is going to take us a few days to really go over everything,” Nicholls explained.
In a statement issued today, the FTC cautioned the public against drawing any conclusions from the preliminary decision, noting that Sol’s response to the findings still had to be considered.
“The Commission has not issued a final decision on the Sol/BNTCL merger application. The applicants were required to respond to the Preliminary Findings Report (PFR) by June 30, 2017 and have subsequently requested and been given additional time to submit their responses. The Commission will analyze these responses before making its final determination on this matter, following which the applicants and the public will be notified,” the statement said.
In his May 30 Budget presentation, Minister of Finance Chris Sinckler had said the cash-strapped Freundel Stuart administration was still banking on the BNTCL deal to go through as it seeks to erase a $537.6 million fiscal shortfall before the next general election.
However, in support of the scrutiny of the deal by the FTC, Opposition Leader Mia Mottley in her response had given a vote of confidence to the regulatory authority, saying there was no need to be concerned about its independence.
Mottley who had suggested that Sinckler had already come to the realization that the Sol deal could not go through, also expressed the hope that Government would not “bring legislation in this country to distort the powers” of the FTC.
Minister of Commerce and International Business Donville Inniss, whose ministry has responsibility for the FTC, today made it clear “as long as I am their minister, the independence of the FTC shall not be questioned”.
“I am also very clear as to the fundamental difference between a preliminary and a final report,” Inniss added.