Tag: Petroleum

Under the terms of the consent orders Chevron and Unocal will cease enforcing Unocal’s patents covering reformulated gasoline that complies with California Air resources Board Standard, will not undertake any new enforcement efforts related to the particular patents, and will cease all attempts to collect damages, royalties, or other payments related to the use of any of the patents. In addition, the companies will dismiss all pending legal actions related to alleged infringement of the patents. According to the complaint, the acquisition of the Unocal patents by Chevron would have facilitated coordinated interaction among downstream refiners and marketers of CARB gasoline.

An administrative law judge dismissed a complaint in its entirety against Union Oil of California that charged the company with committing fraud in connection with regulatory proceedings before the California Air Resources Board regarding the development of reformulated gasoline. The judge ruled much of Unocal’s conduct was permissible activity under the Noerr-Pennington doctrine and that the resolution of the issues outlined in the complaint would require an in depth analysis of patent law which he believed were not with the jurisdiction of the Commission. In July 2004, the Commission reversed the judge’s ruling and reinstated charges that Unocal illegally acquired monopoly power in the technology market for producing a “summer-time” low-emissions gasoline mandated for sale and use by the CARB for use in the state for up to eight months of the year. While the case was pending before the administrative law judge, Unocal agreed to settle the claims and cease and desist enforcing Unocal’s patents covering reformulated gasoline that complies with California Air resources Board Standard, will not undertake any new enforcement efforts related to the particular patents, and will cease all attempts to collect damages, royalties, or other payments related to the use of any of the patents.  The settlement in this case was related to the settlement of FTC charges that Chevron's acquisition of Unocal would substantially lessen competition in the refining and marketing of CARB reformulated gasoline, as Chevron would acquire the relevant Unocal patents through the acquisition and would be able to use its position to coordinate with its downstream competitors, to the detriment of consumers.  See In the Matter of Chevron Corporation and Unocal Corporation.

The consent order settled charges that Buckeye's proposed acquisition of five refined petroleum products pipelines and 24 petroleum products terminals in the United States from Shell Oil Company would reduce competition in the market for the terminaling of gasoline, diesel fuel, and other light petroleum products in the area of Niles, Michigan. Buckeye agreed to notify the Commission before acquiring any interest in the Niles petroleum terminal for a period of ten years.

A consent order permitted the $45 billion merger of Chevron and Texaco In., but required significant divestitures in the petroleum industry, including gasoline marketing assets, refining and bulk supply facilities, crude oil pipeline interests and terminaling facilities. Specifically, the Commission alleged that the proposed acquisition would likely substantially reduce competition in each of the following markets: 1) gasoline marketing in the western United States (in Arizona, Idaho, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming), the southern United States (in Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, Tennessee, Texas, Virginia, and West Virginia), in Alaska and Hawaii, and smaller local areas; 2) the marketing of California Air Resources Board (CARB) gasoline in California; 3) the refining and bulk supply of CARB gasoline for sale in California; 4) the refining and bulk supply of gasoline and jet fuel in the Pacific Northwest (Washington and Oregon, west of the Cascade mountains; 5) the bulk supply of Phase II Reformulated Gasoline (RFG II) in metropolitan St. Louis, Missouri; 6) the terminaling of gasoline and other light petroleum products in Arizona (Phoenix and Tucson), California (San Diego and Ventura), Mississippi (Collins), and Texas (El Paso), and the Hawaiian islands of Hawaii, Kauai, Maui, and Oahu; 7) the pipeline transportation of crude oil from California's San Joaquin Valley; 8) the pipeline transportation of crude oil to shore from portions of the Eastern Gulf of Mexico; 9) the pipeline transportation of offshore natural gas to shore from locations in the Central Gulf of Mexico; 10) the fractionation of raw mix into natural gas liquids products at Mont Belvieu, Texas; and 11) the marketing and distribution of aviation fuel to customers in the western and southeastern United States.

The consent order permitted Valero to complete its $6 billion merger with Ultramar Diamond Shamrock Corporation, but required the divestiture of Ultramar's Golden Eagle Refinery, bulk gasoline contracts, and 70 Ultramar retail service stations in Northern California to a Commission-approved acquirer. According to the complaint, the merger as originally proposed, would have lessened competition in two refining markets in California resulting in consumers paying more than $150million annually if the price of CARB gasoline increased just one cent per gallon. CARB gasoline meets the specifications of the California Air Resources Board.

A consent order settled antitrust concerns stemming from Exxon's acquisition of Mobil Corporation, but requires the largest retail divestiture in Commission history. The divestitures, representing only a fraction of the worldwide assets of Exxon and Mobil, include 2,431 gas stations; an Exxon refinery in California; a pipeline; and other assets. According to the complaint, the proposed merger would injure competition in moderate concentrated markets -California gasoline refining, marketing and retail sales of gasoline in the Northeast, Mid-Atlantic and Texas; and in the highly concentrated markets for jet turbine oil.

The Commission authorized staff to file a motion in federal district court to prevent the merger of BP Amoco p.1.c. and Atlantic Richfield Company. The complaint, filed in the U.S. District Court for the Northern District of California, alleged that the merger would reduce competition in the exploration and production of Alaska North Slope crude oil and its sale to West Coast refineries, and in the market for pipeline and storage facilities in Cushing, Oklahoma. Under the terms of the order, BP Amoco was required to divest all of ARCO's assets relating to oil production on Alaska's North Slope (ANS) to Phillips Petroleum Company or another Commission-approved purchaser. BP Amoco also would have to divest all ARCO assets related to its Cushing, Oklahoma crude oil business within four months.

Consent order in BP Amoco p.1.c. (created by the merger of British Petroleum Company, p.1.c. and Amoco Corporation) requires the divestiture of 134 gas stations in eight markets and nine Light petroleum products terminals settling charges that the merger would substantially reduce competition in certain wholesale gasoline markets.

Exxon will divest its viscosity index improver business to Chevron Chemical Company LLC to settle allegations that its proposed joint venture with Royal Dutch Shell to develop, manufacture and sell their fuel and lubricants additives would reduce competition and lead to collusion among the remaining firms in the market.

Shell Oil and Texaco settled allegations that their proposed joint venture would reduce competition and could raise prices for gasoline in Hawaii, California, and Washington and the price of asphalt in California. The consent order requires Shell to divest a package of assets, including Shell's Anacortes, Washington refinery; a terminal and retail gasoline stations in Oahu, Hawaii and retail gas stations, and a pipeline in California.