Ampol jumped 2.5% this week after Australia's competition regulator, the ACCC, cleared its acquisition of EG Group's Australian petrol station network, conditional on Ampol selling off dozens of sites to limit market concentration. The market liked the news. Consumers probably should not.
On paper, the divestiture condition looks like the regulator doing its job. In practice, it is a compromise that rarely delivers what it promises. Forced asset sales in fuel retail tend to attract smaller, undercapitalised buyers who lack the scale to genuinely compete with the acquirer. The result is the appearance of competition without the substance of it.
Ampol already operates 576 branded service stations and 46 under its discount U-Go banner, which it plans to expand. Absorbing EG Group's network makes it substantially larger in a market already criticised for opaque pricing and regional price gouging. Fewer independent operators means less pressure on margins, and that flows directly to what Australians pay at the bowser.
This is not an isolated case. It is a pattern. Australian fuel retail is one chapter in a much longer story of market consolidation that is quietly strangling household budgets. Grocery retail is the most obvious parallel: Woolworths and Coles together command roughly 67% of the national supermarket market, a concentration level that would trigger serious regulatory intervention in most comparable economies. The ACCC's own 2024-25 supermarket inquiry found that prices remained elevated well after input costs fell, the clearest possible signal that competitive pressure was insufficient to force them down.
The mechanism is the same across sectors. When two or three players dominate a market, they do not need to collude to keep prices high. They simply need to avoid competing aggressively, and in concentrated markets, that is the rational strategy for each of them. Economists call this tacit coordination. Australian households call it the cost of living.
High barriers to entry compound the problem. In fuel retail, the capital required to establish a new service station network, secure supply agreements, and compete on price with an integrated refiner retailer like Ampol is prohibitive. In groceries, supplier terms, shelf access, and private label competition make meaningful new entry nearly impossible at scale.
What makes this particularly frustrating is that the regulatory tools to address it exist. The ACCC has investigative powers, divestiture authority, and the ability to recommend legislative reform. What has been historically absent is the political will to use them with sufficient force. Until Australia treats market concentration as a first order cost of living issue rather than a technical competition law question, the consolidation will continue, the barriers will rise, and consumers will keep funding the margins of an ever smaller number of very large companies.
"The Australian economy suffers from high levels of market concentration to the detriment of consumers, small business and productivity."— Rod Sims, Chair, Australian Competition and Consumer Commission (2011-2022), National Press Club, February 2022
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