Colombia: TERPEL & EXXONMOBIL Conditions of Integration

Colombia: TERPEL & EXXONMOBIL Conditions of Integration

The Colombian Dept. of Industry (SIC) objected to the final purchase of EXXONMOBIL fuel business by TERPEL considering that this would limit free competition within the country’s fuel market.

Both companies own close to 54% of the country’s business and around 64% of fuel sales. In addition, together they have property over 52% of fuel supply plants in the country, infrastructure necessary for the distribution of fuel, which would condition the entry of potential competitors and the expansion of those already established.

TERPEL will have to immediately sell EXXONMOBIL’s fuel business in Colombia to an independent third party and will not be allowed to have any control over it. While this takes place, the business will have to be transferred on a provisional basis to an independent third party, while the sale is completed within 6 months.

TERPEL’s purchase of EXXONMOBIL’s lubricant business will be conditioned to the sale (within 6 months) of TERPEL’s lubricant plant in Colombia as well as its brands Máxter and Máxter Progresa. They are also under obligation to preserve the market’s competition conditions, by lifting the exclusivity in distribution and sale of lubricants agreed with their service stations (EDS), under their brand, and no further exclusivity to be agreed during the next 10 years.

EXXONMOBIL will continue to operate in Colombia’s upstream sector (exploration), as well as maintain current agreements with direct clients on lubricants sales (mainly multinationals) over the next 20 years. With this move, TERPEL hopes to commercialise the Mobil lubricants market as soon as possible in the Colombian market.

The breach of these conditions can generate fines of up to $75 million Pesos, and the order to revert any business agreements between both parties immediately.

Following the announcement of the conditions stipulated by the SIC, relating to EXXONMOBIL operations in Ecuador and Peru (once the transaction is completed in about 4 weeks’ time) Terpel will be able to take control of the lubricant business in both countries, as well as the service stations in Ecuador and the Aviation fuel operations in Peru. The agreement between both companies is now integral and indivisible. PWKD27022018

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