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Australian motorists to win as fuel wars ramp up

DailyTelegraph.com.au

MOTORISTS, rejoice - supermarket behemoths Woolworths and Coles finally have a strong independent competitor that will put much-needed downward pressure on petrol prices.

Convenience store empire 7-Eleven will become Australia's biggest independent fuel retailer after buying 295 petrol stations from Mobil Oil Australia, lifting its stores to 650.

The global brand, operated in Australia by Peregrine Corporation, said yesterday it expected to convert the Mobil stores by the end of 2011 and share an industry dominated by Woolworths-Caltex and Coles Express-Shell.

While the sale creates a major sector stakeholder, it also continues the local demise of the Mobil brand, which late motor racing king Peter Brock helped build through its association with motorsport.

"This is not simply complementary to our business, it is our business," said 7-Eleven Australia chief executive Warren Wilmothe.

"Similar acquisitions in the past have delivered significant per-store merchandise sales growth, demonstrating the strength of the brand's consumer appeal."

The company would not comment on the price it paid for the stores but analysts believe the final sum was well under the $300 million Caltex had offered to purchase the sites last year.

That generous offer was dismissed by the Australian Competition and Consumer Commission in December because of fears it would erode competition in a competition-starved marketplace.

Independent petrol analyst and University of NSW professor Frank Zumbo told The Daily Telegraph yesterday the purchase was a win for motorists, who were still being short-changed by Australian refineries, with only 4 per cent of the recent 12 per cent slide in global oil prices being passed on at the pump.

"Motorists should be very happy that these service stations have gone to an independent player rather than one of the major retailers," he said.

"If they had ended up with Caltex, we would no doubt have seen higher prices at the pump. There is now hope of greater competition in the marketplace."