The creation of the Competition Regulatory Authority (ARC) opened a new field of action in economic regulation. The economic model, marked by the presence of state-owned enterprises, lack of institutional independence, and restrictive regulations, continues to hinder investment.
The ARC had required Sonangol to sell, by October 2024, its stake in TEMA — TotalEnergies Marketing Angola, created in 2019 in partnership with TotalEnergies to operate fuel stations. A year after the deadline, nothing has changed, meaning that the parties involved are failing to comply with Angola’s competition laws. Sonangol had also committed to the ARC, back in 2021, to divest its shares in service stations where it partners with competitors, namely Sonangalp and Pumangol.
None of these processes have made tangible progress, which jeopardizes market functioning and competition in Angola’s fuel distribution sector, according to ARC’s published rulings.
In 2019, Sonangol and the French oil company formed TEMA, owned 50.02% by subsidiaries of the Angolan state oil company.
In compliance with legal requirements on company mergers and concentration, an opinion was requested from the ARC, which approved the creation of the joint venture but imposed several conditions. Among the measures set by the ARC to ensure compliance with the law was the “obligation for Sonangol to begin its divestment process by selling 5% of its shares starting from the third year after the company’s establishment” (2021), with the remaining shares to be sold by the fifth year (2023).
A Sonangol source admitted unofficially to Expansão that the oil company continues to seek to defend the country’s interests, referring to the need to recover the investment made in TEMA and other subsidiaries operating in the fuel distribution segment.
Throughout the process, and following ARC’s ruling criticizing the excessive concentration of interests in the sector and requiring the oil company to divest, Sonangol sought authorization to extend the resolution deadline to 2027, but this request was denied.
“After analysis, the ARC rejected Sonangol’s request, as it found insufficient grounds to justify extending its participation in TEMA. Consequently, the ARC instructed Sonangol to ensure the complete divestment of its shares between November 2023 and October 2024,” stated Angola’s largest company in its 2024 annual report.
However, Sonangol’s latest management report for 2024 makes no reference to compliance with the law or ARC’s rulings.
Expansão also attempted to obtain further details from TotalEnergies, which requested that an official letter be addressed to TEMA’s Chairman for internal review.
What the Law Says
In 2019, ARC’s opinion found that “with this merger, Sonangol strengthens its market power and consolidates its dominant position.”
The authority further stated that “quantitative assessment of retail activity by province shows that in some local markets there is no adequate response capacity,” and that the merger “reinforces Sonangol’s relative monopoly in eight local markets (provinces),” in a segment where the national oil company already holds a monopoly over primary logistics and refining activities.
“The overlap and integration increase the likelihood of explicit or tacit coordination,” which negatively affects consumer welfare and “fosters abusive exercise of market power, coordination among companies, and reduced rivalry.”
ARC also noted that Sonangol’s dominant position is “facilitated by the existence of legal, regulatory, economic, and technological barriers, as well as integration along the downstream petroleum products chain, which reduces the likelihood of new competitors entering the market with operational capacity, thereby limiting effective competition. This harms the business environment, market efficiency, productivity, and competitiveness.”
ARC’s description of the legal, regulatory, and economic barriers highlights several constraints that persist in the fuel distribution sector. For instance, Article 3(2) of Presidential Decree No. 132/13 restricts, according to ARC, “the fundamental right of free enterprise by limiting the participation of foreign investors in the petroleum sector, requiring them to associate with a national investor and submit to their control — unlike national investors, who may access the market independently, thus enjoying a discriminatory advantage.”
Source: Expansão
