Australia's competition watchdog has blocked Caltex Australia's proposed A$300 million ($278 million) purchase of ExxonMobil's Australian gas service stations, sending Caltex shares down more than 3 percent.
The Australian Competition and Consumer Commission (ACCC) said on Wednesday, Caltex's planned purchase by Mobil's 302 service stations was likely to substantially lessen competition across a range of retail fuel markets in Australia.
The commission said it had identified 53 Mobil stations which, if acquired by Caltex, would have reduce competition for petrol, diesel and automative liquid petroleum gas markets, leading to higher prices.
Shares in Caltex, 50-percent owned by U.S. energy major Chevron Corp, fell 2.6 percent to A$9.35. The stock rose 6 percent on Monday after an analyst said the deal could secure regulatory nod.
Mobil also told the commission that it plans to exit its retail business in Australia within the next 2-3 years if the deal with Caltex fell through.
"Under any likely alternative sale, the ACCC considers that a significant proportion of the sites would be purchased by retailers with a greater propensity to discount compared to the oil majors, including Caltex," the ACCC said.
Caltex, which runs two oil refineries accounting for about 35 percent of Australia's refining capacity, said it would decide on its next step after further discussions with the watchdog.
Analysts have said that Caltex could either decide to buy less Mobil gas stations or look at other acquisition targets.
Caltex, Australia's top oil refiner, has been diversifying its earnings by expanding into fuels marketing business, due to stiffer competition in its traditional refining business. A successful deal would have boosted Caltex's share of Australia's fuel retail market to 22 percent from 16 percent.