FTC Requires Tesoro to Sell Petroleum Terminal as a Condition for Acquiring Chevron Assets

Oil refiner Tesoro Corporation and one of its subsidiaries have agreed to sell their light petroleum products terminal in Boise, Idaho to settle Federal Trade Commission charges that their $335 million acquisition of pipeline and terminal assets from Chevron Corporation would be anticompetitive.  Without the divestitures required by the FTC, the deal would have given Tesoro ownership of two of the three full service light petroleum terminals in Boise, significantly reducing competition for local terminal services.

“The proposed order announced today is another example of the Federal Trade Commission’s work to protect competition in U.S. petroleum markets, which are critical to consumers,” said Richard Feinstein, Director of the FTC’s Bureau of Competition.  “The sale of Tesoro’s terminal will preserve the competitive conditions that exist today for terminal customers in Boise.”        

Tesoro Corporation owns several petroleum products terminals, including its terminal in Boise that receives light petroleum from the Northwest Products Pipeline, a 760-mile long interstate pipeline owned by Chevron that carries petroleum products from Salt Lake City to Idaho and Washington.  Chevron also owns petroleum terminals along the Northwest Pipeline in Idaho and Washington State, including one in Boise.       

On December 6, 2012, Tesoro Corporation and its subsidiary, Tesoro Logistics Operations LLC, agreed to buy the Northwest Products Pipeline system and Chevron’s associated terminals, including the one in Boise, for $355 million. The FTC’s complaint alleges that the transaction as proposed would give Tesoro control over most of the terminal capacity in Boise, leading to substantially reduced competition in the local market and increased terminal costs which are passed on to consumers.

The proposed order settling the FTC’s charges resolves these alleged anticompetitive effects by requiring Tesoro to sell the terminal it currently owns in Boise to an FTC-approved buyer within six months of when the order becomes final.  Under the proposed order, Tesoro can complete the acquisition of Chevron’s Northwest Products Pipeline and associated terminals immediately after the order is issued.

The proposed consent order also contains a separate order to maintain assets, which is designed to preserve the Tesoro’s Boise terminal as a viable, competitive, and ongoing business.

The Commission vote to accept the consent agreement package containing the proposed consent order for public comment was 4-0.  The FTC will publish a description of the consent agreement package in the Federal Register shortly.  The agreement will be subject to public comment for 30 days, beginning today and continuing through July 19, 2013, after which the Commission will decide whether to make the proposed consent order final.  Interested parties can submit written comments electronically or in paper form by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section. 

Comments in paper form should be mailed or delivered to:  Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, DC 20580.  The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions. Comments also can be submitted electronically.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.  When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions.  Each violation of such an order may result in a civil penalty of up to $16,000.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., N.W., Room 7117, Washington, DC 20001. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.