| Positive conditional decision of the European Commission on taking control by PKN ORLEN S.A. over Grupa LOTOS S.A. Regulatory announcement no 43/2020 dated 14 July 2020
PKN ORLEN S.A. („Company”) notifies that on 14 July 2020 it obtained a positive conditional decision from the European Commission („Commission”) on the clearance for the concentration consisting in the Company taking control over Grupa LOTOS S.A. having its registered seat in Gdańsk („Grupa LOTOS”). The Commission’s decision was issued on the basis of Article 8(2) second paragraph of Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) (EU Official Journal L No. 24, p. 1). With regard to the above, the Company is required to implement remedies specified in the content of this decision, aimed at preventing negative effects of the proposed concentration on competition in the relevant markets („Remedies”). The Remedies include structural and behavioural commitments that relate to the structure and policies of the undertakings participating in the concentration – the Company and Grupa LOTOS - and consist of:
1) in fuel production and wholesale activity: a) entering into a joint venture agreement with an independent third party and, as a result, divestment to this independent third party of 30% of the shares in the joint venture, to which the Grupa LOTOS’ refinery located in Gdańsk will be contributed as an in-kind contribution and granting this third party contractual rights in the scope of corporate governance; b) entering into relevant agreements with the entity indicated in item a) concerning production and receipt of products produced by the refinery in Gdańsk, including sales of fuel; c) granting the entity indicated in item a) an option to access, in a specified period, the crude oil storage in the scope necessary for the abovementioned entity to perform the CSO obligation; d) granting the entity indicated in item a) an option to outsource its fuel logistics to the Company (for diesel and gasoline); e) granting the entity indicated in item a) an option to access the transhipment terminal owned by the company NAFTOPORT Sp. z o.o. in order to enable this entity to export jet fuel; f) granting the entity indicated in item a) an option to access in a specified period, the storage capacity at terminals in Olszanica and Warsaw (Chopin airport), owned and operated by the Company; g) divestment to the entity indicated in item a) of a structured part of the business currently run by Lotos Paliwa Sp. z o.o. in the wholesale of fuel; h) granting the entity indicated in item a) an option to purchase 100% of the shares in Lotos Biopaliwa Sp. z o.o.; if the entity indicated in item a) does not exercise the option in question, the Company will be required to sell the shares in Lotos Biopaliwa Sp. z o.o. to another independent third party; i) granting the entity indicated in item a) an option to acquire the part of the business of Orlen KolTrans S.A. in the scope of rail fuel transport activity;
2) in fuel logistics: a) divestment to an independent logistics operator of a package comprising of: • 100% of the shares of the companies Lotos Terminale S.A. and Lotos Infrastruktura S.A. The divestment of the abovementioned shares will result in the purchaser taking control over the entirety of the fuel storage infrastructure used by Grupa LOTOS and its subsidiaries, for both operational purposes and for mandatory stocks at the fuel depots in Jasło, Czechowice-Dziedzice, Poznań, Rypin and Piotrków Trybunalski, with the exception of the fuel storage infrastructure located at Grupa LOTOS’ refinery in Gdańsk, and also taking control over the company RCEkoenergia Sp. z o.o.; the above also comprises the commitment not to book capacities by the Company, Grupa LOTOS and their subsidiaries at the abovementioned depots in the specified period; • four fuel terminals, forming the logistics infrastructure of the Company, located in Gdańsk, Szczecin, Gutkowo and Bolesławiec; the above also comprises the commitment not to increase the use of the above terminals by the Company in the specified period, provided that the Company will be entitled to use the abovementioned terminals taking into account the current sales volume adjusted with the future expected increase in consumption. b) implementation of an investment consisting in construction of a new jet fuel import terminal located on the area of the divested depot in Szczecin, which is to be owned and operated by the independent logistics operator; the implementation of the investment in question will take the form and scope agreed with the independent logistics operator; the above also comprises the commitment not to book the capacity in the abovementioned terminal in a specified period; c) release of the storage capacity contracted by the Company and Grupa LOTOS in selected fuel terminals owned by third parties (including at the sea import terminal in Dębogórze), which also covers the commitments: (i) not to exceed in a specified period the maximum storage capacity determined by the Company and accepted by the Commission for selected fuel terminals owned by third parties, and (ii) not to contract in a specified period any new storage capacities for diesel, gasoline and light heating oil in the existing or new fuel depots located in Poland and owned by third parties, subject to exceptions agreed with the Commission.
3) in retail activity: a) divestment of 100% of the shares in Lotos Paliwa Sp. z o.o. to an entity present on the Polish market for retail supply of fuels, which will encompass the following package of petrol stations of the retail chain of Lotos located in Poland: • 389 existing petrol stations, comprising of 256 CODO stations and 133 DOFO stations, among which there are included 20 petrol stations operating within the so-called MOPs (motorway rest and service area), and • 14 lease agreements for new petrol stations operating within the so-called MOPs; b) not to solicit the control (including gaining ownership or entering into franchise agreements) over any of the DOFO stations referred to above, in the specified period from the day of divestment of shares in the company Lotos Paliwa Sp. z o.o.; c) transferring of the petrol stations of rights and obligations arising from agreements concluded with fuel card holders issued by Lotos Paliwa Sp. z o.o. to the purchaser; d) granting the purchaser of the petrol stations a license to use the Grupa LOTOS brands (including trademarks such as Lotos, Navigator, Dynamic and others) in a specified period necessary to rebrand the above petrol stations; e) granting the purchaser of the petrol stations the sales of fuel in a specified quantity and period;
4) in jet fuel: a) divestment of all shares held by Grupa LOTOS in the company Lotos-Air BP Polska Sp. z o.o., and, as a consequence, termination of the joint-venture agreement concluded between Grupa LOTOS and the other party of the abovementioned joint venture agreement; b) granting Lotos-Air BP Polska Sp. z o.o. the sale of jet fuel in a specified quantity and period; c) granting Lotos-Air BP Polska Sp. z o.o. access to the storage capacity at the terminals located in Olszanica and Warsaw (Chopin airport), owned and operated by the Company, by renting capacity or providing storage services in a specified volume and period; d) granting third parties access to storage capacities at the terminal located in Warsaw (Chopin airport) owned and operated by the Company, by renting capacity or providing storage services on the basis of an agreement or agreements on similar terms to those used for Lotos-Air BP Polska Sp. z o.o.; e) ensuring delivery of jet fuel on the territory of Czechia in a specified quantity and period, on the basis of an agreement or agreements concluded with independent third parties operating on the territory of Czechia awarded on the basis of open, non-discriminatory annual tenders;
5) in bitumen: a) divestment of the part of the business of Lotos Asfalt Sp. z o.o. comprised of two production plants located in Czechowice-Dziedzice and Jasło or alternatively entering into a lease agreement of this part of business with an independent third party for a specified period; b) divestment of the part of the business of Lotos Asfalt Sp. z o.o. comprised of Lotos Asfalt’s employees (including the bitumen sales team) and all components of the undertaking necessary to conduct business in production plants indicated in item a); c) granting the purchaser of the abovementioned structured business of Lotos Asfalt Sp. z o.o. an option to grant a license for the use in a given period of selected trademarks of Grupa LOTOS concerning the business activity in the scope of bitumen; d) granting the purchaser of the abovementioned part of the business of Lotos Asfalt Sp. z o.o. sales in a specified quantity and period of: • bitumen (different types) from the Grupa LOTOS’ refinery in Gdańsk, or alternatively • granting the purchaser of the abovementioned part of the business of Lotos Asfalt Sp. z o.o. the sales of heavy residues allowing the purchaser to produce bitumen at the production plant located in Jasło.
The detailed terms and conditions of the abovementioned agreements, including divestment of assets, will be set in the course of negotiations with the Remedies acquirers. Both, the Remedies acquirers as well as the terms and conditions of agreements concluded with them will be subject to the Commission’s approval. Taking into account the fact that the commitments provided for within the Remedies concern not only the Company, but also Grupa LOTOS, PKN ORLEN S.A. will cooperate with Grupa LOTOS in order to properly implement these obligations. At the same time, the Company will enter into negotiations with Grupa LOTOS regarding the content of the agreement determining the terms of this cooperation.
See also: regulatory announcement No. 26/2018 of 27 February 2018, regulatory announcement No. 106/2018 of 30 November 2018, regulatory announcement No. 31/2019 of 3 July 2019, regulatory announcement No. 34/2019 of 26 August 2019 and regulatory announcement No. 42/2020 of 14 July 2020.
Legal basis: Article 17(1) of the Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC.
Management Board of PKN ORLEN S.A.
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