Trade Commission Aug. 30 announced a proposed consent order with
Phillips Petroleum Co. and Conoco Inc. that would allow the merger
of the two companies to proceed upon their agreement to sell certain
assets and provide other relief. Without these conditions, the
Commission stated in its complaint, the proposed merger would
violate federal antitrust laws and lead to decreased competition
through an increase in the likelihood of coordinated interaction,
particularly in the Rocky Mountain region of the United States.
headquartered in Bartlesville, OK, and Conoco, headquartered in
Houston, TX, are fully integrated petroleum companies. On Nov.
18, 2001, Phillips and Conoco agreed to merge the two companies,
with the combined firm to be known as ConocoPhillips. At that
time, it was estimated the value of the new corporation would
be about $35 billion.
to the Commission's complaint, the proposed merger would violate
both Section 5 of the FTC Act and Section 7 of the Clayton Act
by illegally lessening competition in five markets: the bulk supply
of light petroleum products in eastern Colorado and northern Utah;
light petroleum product terminal services in Spokane, WA, and
Wichita, KS; the bulk supply of propane in southern Missouri,
the St. Louis metropolitan area and southern Illinois; natural
gas gathering in more than 50 sections of the Permian Basin in
New Mexico and Texas; and the fractionation processes in Mont
complaint says the combination of Phillips and Conoco would allow
the new firm to raise prices unilaterally or in combination with
other companies, and entry into the relevant markets would be
untimely, unlikely and insufficient to deter or counteract the
anti-competitive effects resulting from the merger.
terms of the proposed order, the companies would be required to
divest certain Phillips and Conoco refineries, marketing assets,
terminal services, natural gas gathering assets and processing
facilities. Also, under the terms of the proposed order, a trustee
would be appointed if the companies fail to complete one or more
of the required divestitures. The companies also would be required
to provide the Commission with compliance reports every 60 days,
until each of the divestitures is completed, and to notify the
FTC with regard to any changes relevant to the terms of the order.
The FTC would have access to the companies' facilities and employees
to ensure they are complying with the order. In addition, if any
state fails to approve the divestitures specified in the proposed
order, the time period allowed for that divestiture would be extended
for 90 days. The proposed order would expire 10 years after the
date it is finalized by the Commission.