EC green lights merger of gas and oil giants Lotos and Orlen

Today's decision follows an in-depth investigation by the European Commission of the proposed merger between the two large Polish integrated oil and gas companies. Tytus Żmijewski/PAP

The European Commission has approved the acquisition of Grupa Lotos by PKN Orlen.

Executive Vice President Margrethe Vestager, in charge of competition policy, said that "access to fuels at competitive prices is important for businesses and consumers alike.”

She said: “Today, we can approve the proposed acquisition of Lotos by PKN Orlen because the extensive commitments offered by PKN Orlen will ensure that the relevant Polish markets remain open and competitive and that the merger will not lead to higher prices or less choice for fuels and related products for businesses and consumers in Poland and the Czech Republic."

Grupa Lotos is active on the wholesale and retail markets for refined oil products, mostly in Poland but also in the Czech Republic, Estonia, Latvia, Lithuania and Slovakia.Adam Warżawa/PAP

Today's decision follows an in-depth investigation by the EC of the proposed merger which combines PKN Orlen and Grupa Lotos, two large Polish integrated oil and gas companies.

They are both active in Poland, where they both own refineries, and also have activities in several other Central and Eastern European and Baltic countries, the EC wrote on its website.

Following its investigation, the Commission had concerns that the transaction, as initially notified, would have harmed competition, in a number of markets.

To address the Commission's concerns, PKN Orlen offered, among other things, to divest a 30 percent stake in Lotos' refinery accompanied by strong governance rights, to divest nine fuel storage depots to an independent logistics operator, and to build a new jet fuel import terminal in the Polish city of Szczecin, which would be transferred to the independent logistics operator on completion.

PKN Orlen owns one of the two refineries existing in Poland as well as refineries in Lithuania and the Czech Republic.Darek Delmanowicz/PAP

Orlen is also to release most of the capacity booked by Lotos at independent storage depots, including the capacity booked at Poland's biggest terminal for the import of fuels by sea and divest 389 retail stations in Poland, amounting to approximately 80 percent of the Lotos network.

PKN Orlen is to sell Lotos's 50 percent stake in its shared jet fuel-marketing venture with BP, to continue to supply the joint venture and to give it access to storage at two airports in Poland.

The Commission found that the combination of divestitures and other commitments would enable the purchasers of the divested businesses, as well as other competitors, to compete effectively with the merged entity in the relevant markets in the future.

The EC concluded that the transaction, as modified by the commitments, would no longer raise competition concerns and stressed that this decision is conditional upon the full compliance with the commitments.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “Today, we can approve the proposed acquisition of Lotos by PKN Orlen because the extensive commitments offered by PKN Orlen will ensure that the relevant Polish markets remain open and competitive.”STEPHANIE LECOCQ/PAP/EPA

PKN Orlen owns one of the two refineries existing in Poland as well as refineries in Lithuania and the Czech Republic. PKN Orlen is active on the wholesale and retail markets for refined oil products in Poland, Austria, the Czech Republic, Estonia, Germany, Latvia, Lithuania and Slovakia.

It also has activities in the upstream exploration, development and production of crude oil and natural gas. In addition, PKN Orlen is active in the petrochemicals market.

Meanwhile, Grupa Lotos owns the only other Polish refinery. Lotos is active on the wholesale and retail markets for refined oil products, mostly in Poland but also in the Czech Republic, Estonia, Latvia, Lithuania and Slovakia.

Like PKN Orlen, it is also active in the upstream exploration, development and production of crude oil and natural gas. In addition, Lotos is active in the petrochemicals market.