Gas merger ban faces appeal

The deal would give Dor Alon some 40% of the service station market, making it the largest in Israel.

By AVI KRAWITZ
November 4, 2005 00:51
2 minute read.
dor alon gas station with plant in foreground 88

dor alon gas station 88. (photo credit: )

 
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The owners of Dor Alon Energy and Sonol will appeal to the courts to overturn Wednesday's decision by anti-trust commissioner Dror Strum to block the merger of the two gas companies. "We intend to go to court as a matter of urgency, to gain permission to go ahead with the acquisition," Dor Alon said in response to the decision. Dor Alon agreed to purchase Sonol from Granite Hacarmel Investments for $155 million in September, in a deal that would give Dor Alon approximately 40% of the service station market, making it the largest in Israel. The two companies currently compete with larger Paz and Delek. On his last day as anti-trust commissioner, Strum opposed the deal saying it would harm attempts by the government to bring fair competition to the local fuel industry. "Seventeen years after the government started its reforms in the gas market, the industry still suffers from the lack of sufficient competition," the anti-trust authority said. "A merger between Dor Alon and Sonol would serve to intensify the centrality of the competition amongst the larger companies." With one less player in the market, there were concerns that cooperation between the companies could result in higher prices and decreased output. Dor Alon CEO David Wiessman said he was disappointed and surprised at the decision which "came despite previous assurances from Strum that he would approve the deal, and support from Infrastructure Minister Binyamin Ben-Eliezer." He further argued that the merger would help the government create a more competitive fuel market in Israel. "Not only will the acquisition not harm competition, it will create a real competitor to Paz by displacing it as the number one gas company for the first time," Wiessman said. The Alon Oil Group is owned 40% by Wiessman's Bielsol Investments, 34% by the Kibbutz Movement and 26% by Africa Israel Trade. Sonol is controlled by Bororovich company Granite Hacarmel and investment firm Glencore.

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