[Federal Register Volume 76, Number 106 (Thursday, June 2, 2011)]
[Notices]
[Pages 31985-31988]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-13598]
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FEDERAL TRADE COMMISSION
[File No. 101 0021]
Irving Oil Limited and Irving Oil Terminals Inc.; Analysis of
Proposed Agreement Containing Consent Order To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of Federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint and the terms of the consent order--embodied in the consent
agreement--that would settle these allegations.
DATES: Comments must be received on or before June 27, 2011.
ADDRESSES: Interested parties may file a comment online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write AIrving Exxon Mobil,
File No. 101 0021'' on your comment, and file your comment online at
https://ftcpublic.commentworks.com/ftc/irvingexxonmobil, by following
the instructions on the Web-based form. If you prefer to file your
comment on paper, mail or deliver your comment to the following
address: Federal Trade Commission, Office of the Secretary, Room H-113
(Annex D), 600 Pennsylvania Avenue, NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Robert E. Friedman (202-326-3316),
FTC, Bureau of Competition, 600 Pennsylvania Avenue, NW., Washington,
DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec. 2.34 the
Commission Rules of Practice, 16 CFR 2.34, notice is hereby given that
the above-captioned consent agreement containing a consent order to
cease and desist, having been filed with and accepted, subject to final
approval, by the Commission, has been placed on the public record for a
period of thirty (30) days. The following Analysis to Aid Public
Comment describes the terms of the consent agreement, and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC Home Page
(for May 26, 2011), on the World Wide Web, at http://www.ftc.gov/os/actions.shtm. A paper copy can be obtained from the FTC Public
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington,
DC 20580, either in person or by calling (202) 326-2222.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before June 10, 2011.
Write ``Irving Exxon Mobil, File No. 101 0021'' on your comment. Your
comment B including your name and your state B will be placed on the
public record of this proceeding, including, to the extent practicable,
on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission tries to
remove individuals' home contact information from comments before
placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
which is obtained from any person and which is privileged or
confidential,'' as provided in Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do
not include competitively sensitive information such as costs, sales
statistics, inventories, formulas, patterns, devices, manufacturing
processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept
confidential only if the FTC General Counsel, in his or her sole
discretion, grants your request in accordance with the law and the
public interest.
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\1\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/southwesthealthalliances by following the instructions on the Web-
based form. If this Notice appears at http://
[[Page 31986]]
www.regulations.gov/!home, you also may file a comment through
that Web site.
If you file your comment on paper, write ``Irving Exxon Mobil, File
No. 101 0021'' on your comment and on the envelope, and mail or deliver
it to the following address: Federal Trade Commission, Office of the
Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, NW.,
Washington, DC 20580. If possible, submit your paper comment to the
Commission by courier or overnight service.
Visit the Commission Web site at http://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before June 27, 2011. You can find more information,
including routine uses permitted by the Privacy Act, in the
Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing Consent Order To Aid Public Comment
I. Introduction
The Federal Trade Commission (``Commission'') has accepted for
public comment, subject to final approval, an Agreement Containing
Consent Order (``Consent Agreement'') from Irving Oil Terminals Inc.
and Irving Oil Limited (collectively ``Irving''). The purpose of the
proposed Consent Agreement is to remedy the anticompetitive effects
resulting from Irving and Irving Oil Transportation Company LLC's
proposed acquisition of certain petroleum products storage and
transportation assets located in Maine from ExxonMobil Oil Corporation
(``ExxonMobil''). As originally structured, Irving would have acquired
ExxonMobil's petroleum products terminals located in South Portland and
Bangor, Maine, as well as ExxonMobil's intrastate pipeline connecting
these two terminals.
The Commission's Complaint alleges that this, 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, by lessening competition in the gasoline and distillates
terminaling services markets in the South Portland and Bangor/Penobscot
Bay areas of Maine. To resolve these competitive concerns raised by the
original transaction, Irving will divest its acquisition rights to the
ExxonMobil Bangor terminal and intrastate pipeline as well as fifty
percent of ExxonMobil's South Portland terminal to Buckeye Partners,
L.P. and its affiliate Buckeye Pipe Line Holdings, L.P. (collectively
``Buckeye''), retaining only the right to acquire the remaining fifty
percent of the South Portland terminal. Buckeye and Irving will form a
joint venture that will purchase ExxonMobil's South Portland terminal.
Under this proposal, Buckeye alone will manage and operate this
terminal on behalf of the Irving-Buckeye joint venture. Buckeye will
purchase and operate ExxonMobil's pipeline and Bangor terminal. Irving
will enter into a throughput agreement with Buckeye at each of the
petroleum products terminals. The Commission's Consent Agreement is
intended to assure that Irving does not control the pipeline and
terminals and does not threaten Buckeye's ability to competitively
operate the South Portland terminal.
The proposed Consent Agreement, to govern for a period of ten
years, prevents Irving from acquiring additional share in, managing, or
operating the South Portland terminal absent the Commission's prior
approval. The Consent Agreement also requires prior notification should
Irving acquire any form of additional ownership interests in petroleum
products transportation or storage assets located in Maine. Finally,
the proposed Consent Agreement imposes firewall and monitor provisions
to prevent Irving from accessing and using confidential customer
information. This remedy preserves competition in the gasoline and
distillates terminaling services markets in both the Bangor/Penobscot
Bay and South Portland areas of Maine.
The proposed Consent Agreement has been placed on the public record
for thirty days to allow interested persons to comment. Comments
received during this period will become part of the public record.
After thirty days, the Commission will review the proposed Consent
Agreement and the comments received, and will decide whether to
withdraw the proposed Consent Agreement, modify it, or make it final.
II. Parties
Irving is a family-owned business based in St. John, New Brunswick,
Canada. Irving owns the largest refinery in Canada and owns, in whole
or in part, six terminals in Canada and the northeastern United States.
Irving supplies branded and unbranded petroleum products in Canada and
throughout New England to third-party distributors, retailers, various
other re-sellers, and governmental and commercial end users. Irving
also owns retail travel plazas that sell gasoline and diesel petroleum
products. In Maine, Irving owns a terminal in Searsport and co-owns a
terminal with CITGO Petroleum Corporation in South Portland.
ExxonMobil is the world's largest publicly traded petroleum and
natural gas company worldwide. ExxonMobil produces crude oil and
natural gas, refines petroleum products, and transports and sells crude
oil, natural gas, and refined petroleum products. ExxonMobil owns
terminals located in South Portland and Bangor, Maine, as well as an
intrastate pipeline that connects these two terminals.
Buckeye is a publicly traded partnership that owns and operates one
of the largest independent refined petroleum products pipeline systems
in the United States. Buckeye owns or manages approximately 7,500 miles
of pipeline, owns approximately 70 active refined petroleum products
terminals, and markets refined petroleum products in some of the
geographic areas served by its pipeline and terminal operations.
Buckeye is not a party to the original transaction and does not
currently market, transport, or store light petroleum products in
Maine.
III. The Relevant Markets and Their Structure
The Commission's Complaint alleges that the original transaction
would pose substantial antitrust concerns in the gasoline and
distillates terminaling services markets in the Bangor/Penobscot Bay
and South Portland areas of Maine.
Terminals generally consist of a number of storage tanks and
loading ``racks'' that pump fuels into tanker trucks for further
delivery. Terminals are specialized facilities connected to one or more
fuel supply sources, have the capacity to store fuel shipments, and
must be configured properly to distribute the fuel to customers. Light
petroleum products terminals are specialized facilities that receive
gasoline, diesel fuel, heating oil, kerosene, and jet fuel, among other
products, by pipeline, by water, by rail, or directly from refinery
production. These products are stored or redistributed by pipeline,
water, rail, or truck. Terminals are critical to the sale and
distribution of transportation fuels and perform value-added services,
such as handling and injection of motor fuel additives (including
ethanol) as petroleum products are redelivered across the truck rack.
Terminaling services consist of a cluster of services
[[Page 31987]]
related to the delivery, storage, and throughput of petroleum products.
The Commission's Complaint alleges that relevant product markets
within which to analyze the original transaction are gasoline
terminaling services and distillates terminaling services. Terminals
that store gasoline compete in both the gasoline terminaling services
and distillates terminaling services markets. However, terminals that
store only distillates compete only in the distillates terminaling
services market. Two relevant geographic areas in which to analyze the
effects of the original transaction on gasoline and distillates
terminaling services are the Bangor/Penobscot Bay and the South
Portland areas of Maine. The Bangor/Penobscot Bay area encompasses the
state of Maine north of Waterville, including Bangor, Searsport, and
Bucksport, Maine. The South Portland area encompasses the state of
Maine south of Waterville, including South Portland.
Irving and ExxonMobil are two of three firms that can independently
offer gasoline terminaling services in the Bangor/Penobscot Bay area
and two of four in the South Portland area. Additionally, these
companies are two of four firms independently offering distillates
terminaling services in the Bangor/Penobscot Bay area and two of six in
the South Portland area. The original acquisition would have
substantially increased concentration in each of the above markets.
IV. Effects of the Acquisition
The Commission believes that the original transaction would
eliminate the actual, direct, and substantial competition between
Irving and ExxonMobil, both: (1) Increasing the likelihood that Irving
would unilaterally exercise market power in the Bangor/Penobscot Bay
area gasoline terminaling services market, and (2) enhancing the
likelihood of collusion or coordinated interaction among the remaining
firms in the South Portland area gasoline terminaling services market
and both the Bangor/Penobscot Bay and South Portland area distillates
terminaling services markets.
The ExxonMobil pipeline, which originates in South Portland and
whose only access point is the ExxonMobil South Portland terminal,
supplies the terminals located in Bangor, Maine. Marine vessels supply
the remaining Bangor/Penobscot Bay area terminals as well as the South
Portland area terminals. Because importing gasoline from Europe on
large cargo vessels is generally less costly than shipping it from
domestic ports on smaller barges, most Maine suppliers import gasoline
from outside the United States.
Controlling the South Portland terminal would allow Irving to
control the price of bulk gasoline deliveries to the Bangor/Penobscot
Bay area. Irving would likely be able unilaterally to raise the price
for or restrict the availability of gasoline terminaling services in
the Bangor/Penobscot Bay area and raise gasoline prices to customers
served from this area's terminals. Additionally, the original
transaction would provide Irving with sufficient terminal capacity to
restrict alternative suppliers' ability to import gasoline into South
Portland area terminals at current prices. The ability to restrict
these imports would allow Irving to increase the cost of gasoline
supplied to retail stations and other consumers from the Bangor/
Penobscot Bay area terminals.
Because the ExxonMobil assets carry both gasoline and distillates,
the original transaction also would likely enhance the likelihood of
coordination to raise fees for and reduce the quality and availability
of terminaling services among the remaining firms that could
independently provide distillates terminaling services in the Bangor/
Penobscot Bay area and provide gasoline or distillates terminaling
services in South Portland area.
Entry into the gasoline and distillates terminaling services
markets in the Bangor/Penobscot Bay and South Portland areas would not
be timely, likely, or sufficient to prevent or defeat the
anticompetitive effects of the original transaction. Entering these
markets is costly, difficult, and unlikely due to, among other things,
the difficulty of obtaining regulatory approvals and the presence of
excess terminal capacity in both markets. Facing substantial sunk
costs, a new entrant would not likely invest in a new terminal in these
markets, all of which presently have sufficient capacity. Further, due
to the significant cost and limited ability to attract large customer
volumes, a terminal that cannot currently store gasoline would not
likely reconfigure its tanks to store gasoline in response to a small
but significant price increase in gasoline terminaling services.
V. The Proposed Consent Agreement
For a duration of ten years, the proposed Consent Agreement
addresses the competitive risk that Irving may: (1) Gain control of the
Irving-Buckeye South Portland terminal in the future, allowing it to
restrict supply to the Bangor terminals and imports into South
Portland, or (2) access and use confidential business information in an
anticompetitive manner. By imposing certain prior approval and prior
notice provisions on Irving and prohibiting it from taking certain
actions, the remedy ensures that the Irving-Buckeye South Portland
terminal will continue to operate independently of, and in competition
with, other Maine terminals. Further, by imposing firewall and monitor
provisions, the remedy guards against Irving accessing and using
confidential information in an anticompetitive manner.
Pursuant to the proposed Consent Agreement, Irving must obtain
Commission approval prior to: (1) Acting as either manager of the
Irving-Buckeye joint venture or operator of the joint venture terminal,
with a limited sixty-day exception in the event that Buckeye is unable
to serve in either capacity, (2) acquiring additional storage or
throughput rights at the joint venture terminal, with a limited one-
month exception, or ownership interests in the joint venture, or (3)
modifying its assignment agreements with Buckeye. Paragraphs II.B. and
II.E. Further, the Consent Agreement requires Irving to notify the
Commission prior to acquiring any form of additional ownership
interests in petroleum products transportation or storage assets
located in Maine. Paragraph IV. Additionally, the Consent Agreement
prohibits Irving from taking action that would discourage or prevent
Buckeye from offering third parties terms equal to Irving's terms at
the South Portland terminal. Paragraph II.C.
The proposed Consent Agreement also prohibits Irving from
receiving, sharing, or using any confidential business information with
limited exceptions that allow the information to be shared where
required and only to those with written agreements to maintain the
information's confidentiality. Paragraph III. To this end, the Consent
Agreement places an enforcement obligation on Irving and provides for
the appointment of a monitor to oversee the implementation of these
provisions. Paragraphs III.C. and V. Such a monitor will review
Irving's compliance proposals and assist in evaluating their adequacy.
Paragraph V.
The proposed Consent Agreement includes the standard divestiture
trustee provision pursuant to which the Commission may appoint a
trustee if Irving fails to effectuate the divestiture in a manner that
complies with the Consent Order. Paragraph VI.A. In this case, the
trustee will divest the assets, subject to Commission prior approval,
within twelve months. Paragraph VI.E.
[[Page 31988]]
VI. Opportunity for Public Comment
The proposed Consent Agreement has been placed on the public record
for thirty days for receipt of comments by interested persons. Comments
received during this period will become part of the public record.
After thirty days, the Commission will review the comments received,
and decide whether to withdraw from the proposed Consent Agreement,
modify it, or make it final. By accepting the proposed Consent
Agreement subject to final approval, the Commission anticipates that
the competitive problems alleged in the complaint will be resolved. The
purpose of this analysis is to inform and invite public comment on the
proposed Consent Agreement, including the proposed remedy, and to aid
the Commission in its determination of whether to make the proposed
Consent Agreement final. This analysis is not intended to constitute an
official interpretation of the proposed Consent Agreement, nor to
modify the terms of the proposed Consent Agreement in any way.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2011-13598 Filed 6-1-11; 8:45 am]
BILLING CODE 6750-01-P