FEARS that Statoil's proposed of the Jet stations could reduce competition in the market place and lead to higher petrol prices prompted the Minister for Enterprise and Employment, Mr Bruton, to block the Norwegian company's bid for Jet.

The Minister's moves follows an investigation by the Competition Authority. It argued that if Statoil purchased Conoco Ireland Ltd, the company which owns the Jet stations, it would be likely to restrict competition and would not be in the interests of consumers.

If the takeover had gone ahead would have given Statoil just over 25 per cent of the market, a "marginally dominant" position, according to Statoil, whose nearest rival would be Esso, at around 25 per cent.

Statoil, which was clearly taken aback by the decision, has rejected the findings.

Statoil's managing director, Mr Ray Clinton, said the decision was a bad one for the consumer. His company is examining what action it can take to overturn the decision.

However Statoil's options appear to be limited to appealing the decision on a point of law to the High Court. No provision exists for the to appeal the Minister's decision it self.

Jet is also believed to be very disappointed by the decision, but has said it will continue to trade in Ireland.

The Competition Authority said the current market seems to be characterised by a strong degree of price competition. Jet has a reputation of being a low price operator while Statoil is a higher price operator.

"It said that Statoil would not alter its strategy and that the strong price competition which in the past was offered by Conoco, would simply disappear, "lessening the competitive pressure on the remaining suppliers".

The takeover would have led to a significant increase in market concentration. "It will by definition reduce the degree of consumer choice by reducing the range of brands available," the authority's report said.

The authority rejected outright, any notion that the increase in Statoil's market size would be likely to lead to any increase in the degree of competition.

Statoil bad argued that it needed to expand to become more competitive. Statoil's managing director, Mr Ray Clinton said last night that the company was shocked by the decision. "On the best available advice we had no indication that it would be rejected.

Mr Clinton said the consumer was the loser by yesterday's decision. He rejected reservations about the cost of petrol rising.

Mr Clinton said that Statoil had been very conscious of the price issue before it went into the acquisition. He said Statoil's whole sale price to petrol dealers was very, competitive. He said Jet operators and customers "would leave the network if they were not supported on price".

Mr Clinton maintained that Jets was not the lowest on price everywhere in the country.

He added that if price was the only consideration, he said, there would be only one player in the market.

He said there were other considerations, including properly developed petrol stations offering a range of goods.

Statoil's bid for Jet was never disclosed, but was estimated to be in the region of £25-£30 million.