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THE Competition and Tariff Commission (CTC) has approved the unconditional merger of petroleum firm, Zuva Group and a Dubai-headquartered global energy logistics company, Tristar Transport.

The commission noted that the merger did not affect effective competition in the relevant market as the transportation services of fuel is highly competitive with more than 20 significant players.

In April 2022, CTC received notification of the acquisition of the issued ordinary shares in HG Storage International by Tristar Transport LLC.

Tristar is a global business headquartered in Dubai offering end to end fuel logistics solutions to blue-chip clients, including international and national oil companies and intergovernmental organisations.

HGS is a diversified portfolio of strategically located petroleum products storage, throughput and downstream retail assets across major storage hubs and import markets.

Its interests in Zimbabwe are held through ZP Energy Mauritius Limited — incorporated in Mauritius in which HGS holds 70 percent shareholding.

HGS operates downstream retail and distribution networks in Zimbabwe through the Zuva Group

“The relevant market was identified as the provision of road transport services for petroleum products in Zimbabwe and the supply of petroleum products in Zimbabwe,” said the regulator.

“The merger was classified as a vertical merger as the merging parties are in a supplier-customer relationship where Tristar provides transport services to the business of HGS.”

HGS operates downstream retail and distribution networks in Zimbabwe through the Zuva Group

CTC highlighted that the merger was assessed using theories of harm prone in vertical mergers, which are input and customer foreclosure.

Foreclosure refers to any instance where actual or potential rivals’ access to supplies or markets is hampered or eliminated as a result of the merger, reducing these companies’ ability and/or incentive to compete.

“Input foreclosure can occur in the instance that Tristar restricts access to transportation services that it would have otherwise supplied to other petroleum wholesalers such as Total Energies and Puma absent the merger,” said CTC in its latest monthly update.

“Customer foreclosure was also dismissed on the notion that there are sufficient economic alternatives in the downstream market for the upstream rivals to provide their services,” said the regulator 

“Therefore, if it so happens, the practice will not significantly impede effective competition in the market.”

Given the analysis, the Commission said the merger did not affect effective competition in the relevant market. In light of that, the Commission approved the merger without conditions.