- Dismisses Hascol’s appeal in PRL shares acquisition
Upholding the Competition Commission of Pakistan’s (CCP) approval of premerger clearance application filed by Pakistan State Oil (PSO) for acquisition of 84 million shares of Shell in Pakistan Refinery Limited (PRL), the Competition Appellate Tribunal has ruled in favour of PSO on Hascol’s appeal against the CCP’s verdict.
Maintaining the CCP’s decision, the tribunal upheld that PSO’s acquisition of the shares will not have any effect on the healthy competition in the market.
Pakistan Refinery Limited (PRL), earlier, offered its shareholders 800pc of the total number of shares that the respective shareholders held in their name as on April 10, 2015, as Right Issue.
PSO, Shell, and Chevron Global Energy Inc (CGEI) held 22.5pc, 30pc and 7.5pc class B shares of PRL, respectively. Following the offer, Shell conveyed its unwillingness to increase its investment in PRL and sought offers from PSO and CGEI in respect of the 84,000,000 ordinary shares offered to Shell by PRL under the Rights Issue.
PSO expressed its intent to acquire all 84,000,000 shares if CGEI failed to respond within stipulated deadline of thirty days, thus increasing its shareholding in PRL to 49.166 percent.
Hascol challenged the transaction by filing a Civil Suit No 969 of 2015 in Sindh High Court at Karachi which is pending adjudication without any restraining order in favour of Hascol.
As per the regulatory requirements, PSO filed an application seeking premerger clearance from the Competition Commission of Pakistan whereas Hascol also filed a complaint to obstruct the transaction.
The complaint of Hascol and PSO’s pre-merger application were decided by CCP’s order dated March 1, 2016, granting unconditional approval of the acquisition of up to 63 million Right Shares in PRL as already renounced by Shell and conditional approval of up to 21 million Right Shares in PRL as renounced by Shell in favour of CGEI but not accepted by it subject to the final decision of the court.
CCP categorically held in its order that the merger transaction is not anti-competitive. Hascol resorted to challenging the CCP’s order before the Competition Appellate Tribunal of Pakistan.
PSO and other respondents successfully defended CCP order by quashing the prospects of anti-competitive foreclosure. Hascol failed to produce any substantial evidence, both, before the CCP, as well as the Competition Appellate Tribunal, to establish that the proposed acquisition would result in a substantial lessening of the competition. The tribunal dismissed the appeal in favour of PSO.
Commenting on the development, PSO’s spokesperson said: “PSO is pleased to receive a go-ahead from the tribunal for acquisition of the shares in PRL, making PSO the largest shareholder.
Unnecessary litigation by Hascol is, however, delaying refinery expansion and up-gradation plans for PRL. As per the plans, PRL will be converted from basic hydro skimming refinery to modern refinery complex to maximise the production of higher RON PMG and EURO II compliant HSD.
Refining capacity of PRL will also be doubled from existing 50,000 barrels per day to 100,000 barrels.
This is critical in view of the government’s plan to switch to Euro II diesel with effect from June 2017 to lower exhaust emissions.