Statement of the Commission
Phillips Petroleum Corporation/Tosco
The Commission has voted unanimously to close its investigation of Phillips Petroleum Corporation's acquisition of Tosco Corporation. We write to provide the public with a clear understanding of our decision in this particular merger transaction, as well as to explain what we believe this enforcement decision portends for the Commission's merger program generally.
Applying the Horizontal Merger Guidelines, as last revised in 1997, the Commission has vigorously prosecuted anticompetitive mergers. For example, in this past fiscal year, which ends on September 30, the Commission has taken enforcement action against 19 mergers. Another four mergers were abandoned after antitrust concerns were raised.
The Commission has applied the Horizontal Merger Guidelines across numerous industries, including crude oil and refined petroleum products. The supply and pricing of crude oil and refined petroleum products not only have a direct impact on each and every individual gasoline consumer, but they also affect the performance of much of our economy. Most recently, the Commission has protected competition by requiring significant divestitures in several major oil company mergers:
In light of these previous enforcement actions and continued industry consolidation, the Commission carefully reviewed this $7 billion merger. We are satisfied that the Phillips/Tosco merger is different from the cases described above, and it is not likely to harm competition and consumers for several reasons.
First, the two merging companies substantially operate in different parts of the country. The combined sales of these two firms would not exceed 10 percent of the oil refining or gasoline marketing sales across the entire country. In those few metropolitan areas where their gasoline marketing businesses overlap significantly, they have a relatively low combined market share. This area-by-area approach is mandated by sound antitrust policy, as reflected in the Horizontal Merger Guidelines. Second, unlike previous cases, this merger does not involve the consolidation of Alaska North Slope reserves and production. Finally, Phillips' acquisition of Tosco's West Coast refineries is unlikely to affect significantly Phillips' supply of Alaska North Slope crude oil to other West Coast refiners or those refiners' output. Based on all of these factors, we have voted to close the Commission's investigation of Phillips' proposed acquisition of Tosco.
Nonetheless, we caution observers to view the Commission's decision in the appropriate context: clearance of this particular merger should not be viewed as a signal that the Commission's merger enforcement standards have changed. They have not. We will continue to apply the Horizontal Merger Guidelines and examine the specific facts and market circumstances when evaluating all future mergers, irrespective of the industries involved.
1. Exxon Corporation/Mobil Corporation, Docket No. C-3907 (consent order issued January 30, 2000).
2. BP Amoco p.l.c./Atlantic Richfield Company, Docket No. C-3938 (consent order issued August 25, 2000).
3. Chevron Corporation/Texaco Incorporated, Docket No. C-4023 (proposed order accepted for placement on public record for comment September 7, 2001).