Brian Zinchuk is editor and owner of Pipeline Online
UPDATED: 12:15 p.m. with comments from FCL
Back in November, 2021, Cenovus announced it would be selling off its fleet of 337 Husky service stations to Federated Co-operatives Ltd and Parkland Corp. But on a deal that size, with ??? sites involved, there was bound to be some issues. And it took roughly 10 months to work them out.
The Competition Bureau announced on Aug. 25 that it has reached agreements with Parkland Corporation and Federated Cooperatives Limited (FCL), respectively, related to their proposed acquisition of Husky retail gas stations.
The decision has direct impacts in Estevan, North Battleford, Melfort and and Foam Lake.
In November 2021, both Parkland and FCL entered into separate purchase agreements to acquire those 337 Husky stations located in Ontario, Manitoba, Saskatchewan, Alberta, and British Columbia.
“The agreements will help protect consumers from paying higher gas prices as a result of eliminating the Husky stations as a competitor in 9 regions in southern Ontario and western Canada,” the Competition Bureau said in a release.
After a thorough review, the Bureau concluded that the separate proposed transactions are likely to result in a substantial lessening of competition in the supply of fuel to consumers in the following local markets:
- Estevan, Saskatchewan;
- Melfort, Saskatchewan;
- North Battleford, Saskatchewan;
- Gimli, Manitoba;
- Minnedosa, Manitoba;
- Portage La Prairie, Manitoba;
- Dauphin, Manitoba;
- Foam Lake, Saskatchewan; and
- Hamilton, Ontario.
In the case of Estevan, there are Husky and Co-op gas stations within 320 metres of each other, just two blocks apart on 4th Street.
On the right, Estevan’s Husky gas station. On the left, 320 metres to the east, is one of the Co-op gas stations. Co-op was not allowed to buy the Husky Station. Parkland will instead. Photo by Brian Zinchuk
To resolve the Bureau’s concerns, both Parkland and FCL signed separate consent agreements with the Commissioner of Competition, whereby:
- The Husky stations in Estevan, Portage La Prairie and Dauphin, Manitoba will be transferred to Parkland instead of FCL.
- Parkland will sell six retail gas stations in Hamilton, Ontario, and FCL will sell the Husky station in Gimli, Manitoba to a buyer or buyers to be approved by the Commissioner.
- The Husky dealer contracts in Foam Lake, North Battleford and Melfort, Saskatchewan, as well as Minnedosa, Manitoba, will be transferred to Parkland instead of FCL.
The Commissioner is satisfied that these agreements address the competition issues likely to result from the proposed transaction, the release said.
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The complete agreements are available on the Competition Tribunal’s website.
The Bureau will publish a comprehensive position statement summarizing the analysis and findings from its review in the coming days.
The purchase is the largest retail acquisition in FCL history. FCL will take ownership of the Husky gas bar sites on Sept. 13. The majority of the acquired sites will immediately be sold to local Co-ops across Western Canada. Over the next 18 months the sites will be transitioned to the Co-op brand or one of Co-op’s independent brands supplied by Co-op.
“This acquisition signals FCL’s commitment to the sustainability of our business and to serving and supporting the long-term needs of local Co-ops,” said FCL CEO Heather Ryan in a release. “This acquisition will help grow the Co-op brand in local communities across Western Canada and will bring the quality products and service Co-ops are known for to new markets.”
Investing in Co-op’s retail fuel network allows FCL to optimize production at its largest manufacturing asset, the Co-op Refinery Complex. The purchase also strikes an important balance for Co-op, as they look to meet the current needs of customers while preparing to shift to the low carbon economy.
“FCL has announced significant investments toward our goal of achieving net-zero emissions by 2050,” said Brian Humphreys, FCL’s Vice-President of Energy. “Increasing the utilization of our fuel manufacturing assets puts FCL in a position to move forward with future investments while providing FCL with the opportunity to take a leadership role in the transition to a low-carbon economy.”
Twenty-three Co-ops will receive new sites through this deal, FCL said
The Husky brand of retail gas stations was acquired by Cenovus Energy in early 2021. Cenovus is selling its Husky retail gas stations and dealer contracts to Parkland and FCL, but will retain all Husky commercial, travel center, and bulk plant operations.
Parkland, headquartered in Calgary, Alberta, provides fuel and petroleum products to communities across Canada, the United States, and the Caribbean. It operates retail gasoline brands such as Ultramar, Pioneer and Chevron.
Headquartered in Saskatoon, Saskatchewan, FCL is a co-operative owned by more than 160 independent local co-operatives across western Canada. It operates in the agriculture, food, energy, and building sectors, and supports a network of retail gas stations in communities throughout western Canada. In making the initial announcement, Husky was looking for additional stations to sell its product through, as its Regina Refinery Complex was not running at full capacity.
Consent agreements generally contain remedial measures that the Commissioner has determined are appropriate to address a proposed transaction’s likely anti-competitive effects. A consent agreement has the force and effect of a court order once it is registered with the Competition Tribunal.
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