Antitrust: Financing details need to be clearer

Antitrust: Financing details need to be clearer


In recent years on the automotive market we have seen a very strong diffusion of purchase formulas other than the classic financing or "cash" purchase - something that hardly happens anymore because many dealers earn precisely from the loans they manage to close. But are these purchase formulas really convenient and clear? The Antitrust has decided to find an answer to this question, and the results have been anything but attractive.

The Antitrust is the authority that guarantees competition and the market, and as such has the '' authority to ask car manufacturers to review their purchase formulas, making them clearer for customers: almost no one was saved, starting with FCA, passing through Volkswagen, PSA (Peugeot, Citroen, Opel and DS), Renault , Toyota, Ford, BMW .. virtually all the major manufacturers have been asked to change the terms in which they describe their offerings to help customers better understand what they are up against.

The methods of submitting purchase offers with financing and leasing were omissive and misleading: the limited amount of the monthly installment was emphasized or a price that did not include financial charges or expenses, at the same time relegating to sections not easy to read, essential information on the cost to be incurred.

Clarity must be the first aspect, and it will be mandatory to have a summary of all the economic information of the contract: amount of the advance, number of installments to be paid and value of the single installment, amount of the final installment, interest TAN and APR and also any range of the guaranteed future value to which you can aspire when you return the car. Doing so creates a more transparent and understandable offer for customers, who will then be able to better choose which car to buy and what kind of financial commitment to support.

Analysis: Antitrust rules, Petro-Canada profits may hinder Suncor from selling unit

TORONTO, Aug 11 (Reuters) - Suncor Energy (SU.TO) could reap over $8 billion and boost returns to unhappy shareholders if it sells its Petro-Canada gas station business, but Canadian antitrust rules and the need for the unit's steady profits could deter that move, analysts and shareholders said.

Suncor's poor safety record and lackluster stock performance prompted a demand for changes from activist Elliott Investment Management, so Canada's second-biggest oil producer replaced its CEO in July and agreed to review its retail fuel unit by the end ofthis year. read more

Analysts estimate the unit could be worth C$5 billion to C$11 billion ($8.61 billion). But it could be hard to actually get that price, since potential buyers are aware of the pressure that Suncor management is under.

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'The way they are going about the sale, they won't get a good price,' said Rafi Tahmazian, director and senior portfolio manager of Canoe Financial LP, a Suncor shareholder. 'They are telling the world they are stressed.'

Petro-Canada's 1,600 stations account for 13% of Canada's fuel retail market, one of the country's top three players. Sale of the unit to a single buyer would likely trigger scrutiny by Canada's antitrust authority, which has recently acquired more powers to crack down on market concentration. read more

'The gasoline market is historically one of the primary focal points of the Competition Bureau' due to fuel's impact on consumers, said Calvin Goldman, its former commissioner. He was not referring to this specific deal.

Petro-Canada's market share would make it hard for competitors Alimentation Couche-Tard Inc (ATD.TO), Seven & i Holdings Co Ltd (3382.T) (7-Eleven) and Parkland Corp (PKI.TO) to swallow alone, said Jason Parent, President at Signal Energy Consulting.

The three companies jointly control 21% of Canada's fuel distribution market according to estimates from various industry sources.

Breaking up a sale into pieces would delay the process. Such deals in the past took at least a year to complete.

In 2016, Imperial Oil (IMO.TO) sold its gas stations to five different distributors.

Parent said non-Canadian competitors BP PLC (BP.L) and Phillips 66 (PSX.N) could be potential suitors, and raise less competition concern. Parkland, Phillips 66, and BP declined to comment. Couche-Tard and 7-Eleven did not respond.

Parkland's CEO Bob Espey said his company could be a Petro-Canada suitor, on BNN Bloomberg Wednesday. Elliott did not respond to an email.

One of Suncor's key considerations is how the potential sale of its stations would affect refinery margins and the company's integrated model, interim CEO Kris Smith said last week.

The company declined further comment.

As the six-month review proceeds, Suncor is on pace to aggressively repay its debt, reducing the urgency for a sale, Tahmazian said.

Shedding the retail business would mean Suncor loses a stable cash-generating business to hedge against volatile oil prices, said Mike Archibald, vice-president and portfolio manager at AGF Investments, a Suncor investor.

Suncor's retail and wholesale business generated C$800 million in EBITDA in 2021, not counting corporate overhead, 7% of Suncor's total EBITDA, according to Elliott.

Oil and gas companies have historically owned fuel retail stations because they ensure consistent sales volumes for their refineries, said Tony Portera, a partner at Boston Consulting Group. That could become even more important once overall fuel sales shrink as motorists buy electric vehicles, Portera said.

Phil Skolnick, an analyst at Eight Capital, said Suncor's position of weakness is why it is unlikely to command a suitable price.

'There is a good chance the deal doesn't go through,' Skolnick said.

($1 = 1.2769 Canadian dollars)

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Reporting by Divya Rajagopal and Rod Nickel; Editing by David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

Rod Nickel

Thomson Reuters

Covers energy, agriculture and politics in Western Canada with the energy transition a key area of focus. Has done short reporting stints in Afghanistan, Pakistan, France and Brazil and covered Hurricane Michael in Florida, Tropical Storm Nate in New Orleans and the 2016 Alberta wildfires and the campaign trails of political leaders during two Canadian election campaigns.