Engen deal puts ownership, influence and competition under CCA spotlight

As the CCA weighs the Engen deal, the real question is no longer ownership but the reach of commercial influence , write GILBERT MANENYE

The Competition and Consumer Authority (CCA) now has less than 30 days to decide whether Fusion Spark Proprietary Limited should be allowed to acquire Engen Botswana after a public hearing transformed the merger review into a broader debate about ownership, influence and competition in the local fuel industry.

What emerged from Tuesday’s hearing was that the transaction is no longer only about the sale of Engen Botswana, but about the wider network of commercial relationships surrounding the company, including fuel supply, logistics, retail and convenience services.

It is this interconnected business environment that the CCA must now consider before making its final determination.

Opening the hearing, Competition and Consumer Authority Merger Review Committee Chairperson Gideon Nkala acknowledged that public hearings are uncommon in merger assessments, but said some transactions attract significant stakeholder interest.

“Ordinarily, ladies and gentlemen, the CCA merger assessment takes the regular form of just getting information from the merging parties and other interested stakeholders without resorting to a public hearing. Occasionally, there are mergers that generate a lot of stakeholder interest such as the current one,” Nkala said.

On paper, the transaction concerns Fusion Spark’s proposed acquisition of a 70 percent stake in Engen Botswana following the CCA’s 2023 decision requiring Vivo Energy to divest the business.

However, the hearing quickly moved beyond the transaction itself, with stakeholders questioning whether competition concerns could arise from the broader commercial interests linked to the acquiring parties.

At the centre of the debate was the question of where ownership ends and influence begins.

The acquiring parties argued that the transaction would not alter Engen Botswana’s operations, maintaining that existing governance structures, dealer agreements and commercial arrangements would remain unchanged.

They argued that shareholders and operating companies have distinct roles, and that operational decisions would continue to be guided by established corporate structures.

Critics, however, urged the CCA to look beyond shareholding percentages and assess the wider commercial ecosystem connected to the deal.

Their argument was that competition concerns should not only be measured by direct ownership, but also by the ability of interconnected businesses to influence different parts of the fuel value chain.

One participant summed up the concern by saying: “The proof is in the pudding.”

Behind Fusion Spark ownership

Although the transaction appears straightforward, with Vivo Energy selling and Fusion Spark buying, the complexity lies in the ownership structure behind the investment vehicle.

Fusion Spark is backed by Mauritius-based MMPG Limited, Surya Artha Holding Limited and Choppies Chief Executive Officer Ramachandran Ottapathu .

Together, they intend to acquire Petroleum Investment Holdings’ 70 percent stake in Engen Botswana, while the remaining 30 percent remains listed on the Botswana Stock Exchange.

Fusion Spark’s legal representatives argued that the transaction should be assessed based on actual legal control rather than assumptions about possible future influence.

They challenged attempts to treat the wider Mount Meru business interests as one integrated operation, arguing that different entities within the group perform separate functions and should therefore be assessed independently.

Counsel argued that Acer Petroleum, which operates as a wholesaler, and Acer Logistics, which provides fuel transportation services, do not create competition concerns because their activities are limited and separate from Engen’s operations.

However, opponents argued that the issue was not one company in isolation but rather the relationship between businesses operating across various stages of the petroleum value chain.

They pointed to links involving fuel transportation, wholesale distribution, retail outlets and convenience stores, arguing that these connections could potentially create influence beyond formal ownership structures.

Dealer agreements become key defence

A significant part of the defence centred on Engen’s dealer network and the contractual agreements that govern relationships between the company and service station operators.

Stakeholders raised concerns about whether the acquisition could eventually affect existing retailers operating from Engen service stations, including the possibility of Choppies On The Go convenience stores expanding into the network.

The acquiring parties dismissed those concerns, arguing that dealer agreements are legally binding and cannot simply be changed because ownership changes.

Choppies CEO Ramachandran Ottapathu said Engen’s network of 71 operators was protected by agreements that typically run between 10 and 25 years.

“No one can interfere in that arrangement without completing that term,” he said.

The acquiring parties argued that these contracts provide protection for existing operators and prevent arbitrary changes to commercial relationships.

Questions were also raised about Acer Logistics and whether the transaction could influence fuel transportation arrangements in Botswana.

Fusion Spark rejected those concerns, maintaining that Acer Logistics operates independently and that the acquisition would not change existing logistics arrangements.

Fuel security and citizen empowerment concerns

Botswana Oil introduced another dimension to the debate, arguing that Engen’s importance extends beyond competition and market share.

The state-owned company raised concerns about the implications of the transaction for fuel security, depot utilisation , infrastructure investment and citizen-owned transport operators who participate in the petroleum supply chain.

Fusion Spark disputed those concerns, arguing that Botswana Oil was combining its strategic fuel security mandate with its commercial interests.

The acquiring parties maintained that issues relating to fuel import allocations and licensing fall under the jurisdiction of the Botswana Energy Regulatory Authority (BERA), rather than shareholders.

The hearing also raised questions about whether the transaction would advance citizen participation in the downstream petroleum sector.

Some stakeholders questioned whether Fusion Spark’s ownership structure could genuinely be regarded as citizen-controlled and whether the deal would contribute to broader economic empowerment objectives.

Fusion Spark argued that such determinations fall outside the CCA’s mandate and should be addressed by the relevant sector regulators.

With the public hearing now concluded, the CCA faces the task of weighing competing arguments before reaching a decision.

The acquiring parties maintain that ownership does not amount to operational control and that existing contracts, governance structures and regulation provide sufficient safeguards.

Opponents argue that modern competition analysis must go beyond formal ownership and consider the practical influence created by interconnected commercial interests.

The CCA is expected to make its determination within the next 30 days, a decision that could set an important precedent for how Botswana assesses competition concerns in increasingly interconnected industries.