UNITED STATES OF AMERICA In the Matter of The British Petroleum Company p.l.c., a corporation, and Amoco Corporation, a corporation. Docket No. C- COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and the Clayton Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission ("FTC" or "Commission"), having reason to believe that respondents The British Petroleum Company p.l.c. (“BP”), a corporation, and Amoco Corporation (“Amoco”), a corporation, have entered into an agreement and plan of merger whereby BP proposes to acquire all of the outstanding common stock of Amoco, that such agreement and plan of merger violates Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, and that such agreement and merger, if consummated, would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its complaint, stating its charges as follows: I. RESPONDENTS A. The British Petroleum Company, p.l.c. 1. Respondent BP is a corporation organized, existing and doing business under and by virtue of the laws of England and Wales, with its office and principal place of business located at Brittannic House, 1 Finsbury Circus, London EC2M 7BA, England. 2. Respondent BP is, and at all times relevant herein has been, a diversified energy products company engaged in oil and gas exploration; the development, production and transportation of crude oil and natural gas; the refining, marketing, transportation, terminaling and sale of gasoline, diesel fuel, jet fuel and other petroleum products; and the production, marketing and sale of petrochemicals. 3. Respondent BP is, and at all times relevant herein has been, engaged in commerce as “commerce” is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. § 12, and is a corporation whose business is in or affecting commerce as “commerce” is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44. B. Amoco Corporation 4. Respondent Amoco is a corporation organized, existing and doing business under and by virtue of the laws of the State of Indiana, with its office and principal place of business located at 200 East Randolph Drive, Chicago, Illinois 60601. 5. Respondent Amoco is, and at all times relevant herein has been, an integrated petroleum and chemical products company engaged in the exploration, development, and production of crude oil, natural gas, and natural gas liquids; the marketing of natural gas and natural gas liquids; the refining, marketing, and transportation of petroleum products, including crude oil, gasoline, jet fuel, diesel fuel, heating oil, asphalt, motor oil, lubricants, natural gas liquids, and petrochemical feedstocks; the terminaling and sale of gasoline, diesel fuel, and other petroleum products; and the manufacture and sale of various petroleum-based chemical products. 6. Respondent Amoco is, and at all times relevant herein has been, engaged in commerce as “commerce” is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. § 12, and is a corporation whose business is in or affecting commerce as “commerce” is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44. II. THE PROPOSED MERGER 7. Pursuant to an agreement and plan of merger dated August 11, 1998, BP intends to acquire all of the outstanding common stock of Amoco in exchange for stock of BP valued at the time of the agreement at approximately $48.2 billion, with the combined entity to be renamed BP Amoco p.l.c. As a result of the merger, BP’s shareholders will hold approximately 60%, and Amoco’s shareholders will hold approximately 40%, of the new combined entity. III. TRADE AND COMMERCE A. Terminaling 8. Petroleum terminals are facilities that provide temporary storage of gasoline and other light petroleum products received from a pipeline or marine vessel, and the redelivery of such products from storage tanks into tank trucks or transport trailers for ultimate delivery to retail gasoline stations or other buyers. There are no substitutes for petroleum terminals for providing such terminaling services. 9. The terminaling of gasoline and other light petroleum products is a relevant line of commerce in which to evaluate the effects of this merger. 10. The following metropolitan areas are relevant sections of the country in which to evaluate the effects of this merger on the terminaling of gasoline and other light petroleum products: Cleveland, Ohio; Chattanooga and Knoxville, Tennessee; Jacksonville, Florida; Meridian, Mississippi; Mobile and Montgomery, Alabama; and North Augusta and Spartanburg, South Carolina (hereinafter collectively referred to as the “terminaling markets”). 11. The terminaling of gasoline and other light petroleum products in each terminaling market is either moderately concentrated or highly concentrated, and would become significantly more concentrated as a result of the merger. Premerger concentration in the terminaling markets, as measured by the Herfindahl-Hirschman Index, ranges from more than 1,300 to more than 2,500, and as a result of the merger concentration would increase in each terminal market by more than 100 points to levels ranging from more than 1,500 to more than 3,600. 12. Entry into the terminaling of gasoline and other light petroleum products in each terminaling market is difficult and would not be timely, likely, or sufficient to prevent anticompetitive effects that may result from this merger. B. Wholesale Gasoline 13. Gasoline is a motor fuel used in automobiles and other vehicles. It is manufactured from crude oil at refineries in the United States and throughout the world. There are no substitutes for gasoline as a fuel for automobiles and other vehicles that use gasoline. 14. The wholesale sale of gasoline is the business of selling gasoline to retail dealers, or to intermediaries (“jobbers”) that in turn sell gasoline to retail dealers. Firms such as BP and Amoco sell gasoline in wholesale quantities as either branded or unbranded fuels at terminals serving particular local areas. The wholesale sale of gasoline is a relevant line of commerce in which to evaluate the effects of this merger. 15. The following cities and metropolitan areas are relevant sections of the country in which to evaluate the effects of this merger on the wholesale sale of gasoline: Albany, Georgia; Athens, Georgia; Birmingham, Alabama; Charleston, South Carolina; Charlotte, North Carolina; Charlottesville, Virginia; Clarksville, Tennessee; Cleveland, Ohio; Columbia, South Carolina; Columbus, Georgia; Cumberland, Maryland; Dothan, Alabama, Fayetteville, North Carolina; Florence, Alabama; Goldsboro, North Carolina; Hattiesburg, Mississippi; Hickory, North Carolina; Jackson, Tennessee; Memphis, Tennessee; Meridian, Mississippi; Mobile, Alabama; Myrtle Beach, South Carolina; Pittsburgh, Pennsylvania; Raleigh, North Carolina; Rocky Mount, North Carolina; Savannah, Georgia; Sumter, South Carolina; Tallahassee, Florida; Toledo, Ohio; and Youngstown, Ohio (hereinafter collectively referred to as the “gasoline markets”). 16. The wholesale sale of gasoline in each gasoline market would be moderately concentrated or highly concentrated after the merger. In markets that would be moderately concentrated after the merger, postmerger concentration, as measured by the Herfindahl-Hirschman Index, would increase by more than 100 points to levels between 1,400 and 1,800. In markets that would be highly concentrated after the merger, postmerger concentration, as measured by the Herfindahl-Hirschman Index, would increase by more than 100 points to levels in excess of 1,800. 17. Entry into the wholesale sale of gasoline in each gasoline market is difficult and would not be timely, likely or sufficient to prevent anticompetitive effects that may result from this merger. IV. VIOLATIONS CHARGED First Violation 18. Respondents Amoco and BP each own terminaling facilities that service each terminaling market, and are competitors for terminaling of gasoline and other light petroleum products in each terminaling market. 19. The effect of the proposed merger, if consummated, may be substantially to lessen competition or tend to create a monopoly in the terminaling of gasoline and other light petroleum products in the terminaling markets in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, in the following ways, among others:
each of which increases the likelihood that the prices of terminaling services for gasoline and other light petroleum products will increase in the terminaling markets. Second Violation 20. Respondents Amoco and BP are actual competitors in the wholesale sale of gasoline in each gasoline market. 21. The effect of the proposed merger, if consummated, may be substantially to lessen competition or tend to create a monopoly in the wholesale sale of gasoline in the gasoline markets in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, in the following ways, among others:
each of which increases the likelihood that the prices of gasoline will increase in the gasoline markets. V. STATUTES VIOLATED 22. The agreement and plan of merger between Amoco and BP constitutes a violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45. 23. The proposed merger, if consummated, would constitute a violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45. IN WITNESS WHEREOF, the Federal Trade Commission has caused this complaint to be signed by the Secretary and its official seal to be affixed, at Washington, D.C. this ______________ day of _________________________ A.D., 19_____. By the Commission. SEAL Donald S. Clark |