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1
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DECISION & ORDER
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EXTRACTED KEY WORDS
COMMISSION RESPONDENTS CONSENT AGREEMENT KOCH INDUSTRIES IMPLEMENTATION TRUSTEE RELEVANT PRODUCT ACT PURPOSES PARAGRAPH FEDERAL TRADE COMMISSION COMPLAINT EKLP PURCHASES REQUEST THEREAFTER GULF SOUTH PIPELINE ENTERGY-KOCH JURISDICTIONAL FACTS RFP PROPOSALS NATURAL GAS STATE REGULATOR GULF SOUTH COVERED FACILITY POTENTIAL SUPPLIER SHORT-TERM PURCHASES TRANSACTION RESPONSIBILITIES COMPLIANCE |
001 0172
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
COMMISSIONERS: Robert Pitofsky, Chairman
Sheila F. Anthony
Mozelle W. Thompson
Orson Swindle
Thomas B. Leary
_______________________________________
)
In the Matter of )
)
Entergy Corporation, )
a corporation, )
) C-3998
and )
)
Entergy-Koch, LP, )
a limited partnership. )
_______________________________________)
DECISION AND ORDER
The Federal Trade Commission ("Commission") having initiated an investigation of the
formation of Respondent Entergy-Koch, LP, by Respondent Entergy Corporation and Koch
Industries, Inc. ("Koch"), and Respondents having been furnished thereafter with a draft
Complaint that the Bureau of Competition proposed to present to the Commission for its
consideration and which, if issued, would charge Koch and Respondents with violations of
Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, and Section 7 of
the Clayton Act, as amended, 15 U.S.C. § 18; and
Respondents, their attorneys, and counsel for the Commission having thereafter executed
an Agreement Containing Consent Order ("Consent Agreement"), containing an admission by
Respondents of all the jurisdictional facts set forth in the aforesaid draft of Complaint, a
that the signing of said Consent Agreement is for settlement purposes only and does not
constitute an admission by Respondents that the law has been violated as alleged in such
Complaint, or that the facts as alleged in such Complaint, other than jurisdictional facts, are
and waivers and other provisions as required by the Commission's Rules; and
DECISION AND ORDER Page 2 of 14
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2
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COMPLAINT
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EXTRACTED KEY WORDS
NATURAL GAS LOUISIANA COMMISSION ELECTRICITY GULF SOUTH KOCH ORLEANS GAS TRANSPORTATION COMMERCE REGULATORS ACT MISSISSIPPI CONSUMERS BUSINESS EKLP RETAIL ELECTRICITY SERVICE COMMISSION PRICES FEDERAL TRADE COMMISSION PROPOSED TRANSACTION PIPELINE PUBLIC SERVICE COMMISSION DISTRIBUTION BATON ROUGE CLAYTON ACT KOCH ENERGY TRADING COSTS PURCHASE COUNTRY |
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
_______________________________________
)
In the Matter of )
)
Entergy Corporation, )
a corporation, )
) No. C-3998
and )
)
Entergy-Koch, LP, )
a limited partnership. )
_______________________________________)
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
("Commission"), having reason to believe that respondent Entergy Corporation ("Entergy") and
Koch Industries, Inc., have formed a limited partnership, Entergy-Koch, LP ("EKLP"), subject to
the jurisdiction of the Commission, and have entered into an agreement whereby EKLP will
acquire, among other things the Gulf South Pipeline Company, LP, and Koch Energy Trading,
and, if the terms of such agreement were to be consummated, would violate 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, 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. Respondent Entergy Corporation
1. Entergy Corporation ("Entergy") is a corporation organized, existing, and doing business
under and by virtue of the laws of the State of Delaware, with its principal place of
business located at 639 Loyola Avenue, New Orleans, Louisiana 70113. Entergy had
revenues of approximately $8.77 billion in 1999.
2. Entergy is, and at all times relevant herein has been, engaged in the generation,
transmission, and distribution of electricity. Entergy provides retail electric service to
customers in portions of Arkansas, Louisiana, Mississippi, and Texas. Entergy also owns
the local natural gas distribution utility in New Orleans and Baton Rouge, Louisiana.
3. Respondent Entergy 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 is affecting commerce as "commerce" is defined in
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3
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AGREEMENT
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EXTRACTED KEY WORDS
CONSENT AGREEMENT EKLP COMMISSION COMPLAINT PROPOSED RESPONDENTS BUSINESS LAWS DRAFT ACCEPTANCE FACTS PROCEEDING CONTEMPLATES PUBLIC RECORD SERVE PROCUREMENT POLICY HEREBY VIRTUE PURSUANT REPORTS MANNER COMPLIANCE KOCH NATURAL GAS RELIEF DELAWARE KANSAS JURISDICTIONAL FACTS EXECUTE THEREAFTER |
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
_______________________________________
)
In the Matter of )
)
Entergy Corporation, )
a corporation, )
) File No. 001-0172
and )
)
Entergy-Koch, LP, )
a limited partnership. )
_______________________________________)
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission ("Commission"), having initiated an investigation of the
formation of Entergy-Koch, LP ("EKLP"), by Entergy Corporation ("Entergy") and Koch
Industries, Inc. ("Koch"), and it now appearing that Entergy and EKLP, hereinafter sometimes
referred to as "Proposed Respondents," are willing to enter into this Agreement Containing
Consent Order ("Consent Agreement") to implement certain safeguards to ensure a competitive
process for the procurement of natural gas and transportation of natural gas ("Procurement
Policy") and provide for other relief:
IT IS HEREBY AGREED by and between Proposed Respondents, by their duly
authorized officers and attorneys, and counsel for the Commission that:
1. Proposed Respondent Entergy is a corporation organized, existing and doing business
under and by virtue of the laws of Delaware, with its office and principal place of business
located at 639 Loyola Avenue, New Orleans, Louisiana 70113.
2. Koch is a privately held corporation organized, existing and doing business under and by
virtue of the laws of Kansas, with its office and principal place of business located at 4111
East 37th Street North, Wichita, Kansas 67220.
3. Proposed Respondent EKLP is a limited partnership, existing and doing business under
and by virtue of the laws of Delaware, with its office and principal place of business
located at 20 East Greenway Plaza, Houston, Texas 77046.
4. Proposed Respondents admit all the jurisdictional facts set forth in the draft of Complaint
here attached.
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4
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LETTER
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EXTRACTED KEY WORDS
ENTERGY AGREEMENT COMMISSION RESPONDENTS PARAGRAPH ENTERGY CORPORATION CONSENT DUTIES CONFIDENTIAL INFORMATION REYNOLDS AUTHORITY OBLIGATIONS EKLP RELEVANT PRODUCT ENTERGY-KOCH REPRESENTATIVES TRUST AGREEMENT RESPONSIBILITIES STATE REGULATOR NATURAL GAS GULF SOUTH PIPELINE FEDERAL TRADE COMMISSION GENERAL COUNSEL PORTFOLIO SUPPLY PLAN GULF SOUTH MODIFIED ORDER COMPLIANCE KOCH INDUSTRIES RELEVANT PRODUCT SPECIFICATIONS |
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Office of the Secretary
February 20,200l
John H. Lyons, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005-2111
Re: Entergy Corporation and Entergy-Koch, LP
Docket No. C-3998
Dear Mr. Lyons:
This letter is to inform you that the Commission has approved the
Agreement entered into by Entergy Corporation and Entergy-Koch, LP with Stephen P.
Reynolds, the Commission-approved Implementation Trustee, as required by Paragraph IRA
the above-referenced order.
By direction of the Commission, Commissioner Anthony recused.
Donald S. Clark
Secretary
Attachment
PUBLIC RECORD VERSION
IMPLEMENTATION TRUSTEE AGREEMENT
PRELIMINARY STATEMENT
DEFINITIONS
ARTICLE I - Implementation Trustee's Rights and Authority
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5
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GLAXO WELLCOME PLC - CLOSING LETTER
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EXTRACTED KEY WORDS
COMMISSION CONSENT AGREEMENT SMOKING CESSATION PRODUCTS VIOLATION DRUGS TREATMENT HERPES GLAXO WELLCOME SMITHKLINE BEECHAM MERGER BEENEY YORK COUNSEL PROPOSED CONSENT ORDER MATTER CONSUMERS ACT DETERMINATION MIGRAINE HEADACHES REMEDY ALLEGED VIOLATIONS REPLACING LOST COMPETITION POTENTIAL EFFECTS ASSISTANCE QUITTING SMOKING REVIEW PENDENCY COMMISSION RESERVES |
January 23, 2001
Mr. Garrard R. Beeney
Sullivan & Cromwell
125 Broad Street #28
New York, New York 10004
Counsel for Glaxo Wellcome, PLC
Mr. George S. Cary
Cleary, Gottlieb, Steen & Hamilton
2000 Pennsylvania Avenue, N.W. #9000
Washington, D.C. 20006
Counsel for SmithKline Beecham, PLC
Re: Glaxo Wellcome plc and SmithKline Beecham plc, File No. 001 0088
Dear Mr. Beeney and Mr. Cary:
In December 2000, the Commission accepted for public comment a Consent
Agreement containing a proposed Consent Order in the above captioned
matter. The Consent Agreement resolved allegations in an accompanying
Complaint that the merger of Glaxo Wellcome plc and SmithKline Beecham
plc, if consummated, would violate Section 5 of the Federal Trade
Commission Act, as amended, 15 U.S.C. § 45, and Section 7 of the
Clayton Act, as amended, 15 U.S.C. § 18, in the markets for the
research, development, manufacture and sale of: (1) 5HT-3 antiemetic
drugs; (2) ceftazidime; (3) second generation oral and intravenous
antiviral drugs for the treatment of herpes virus infections; (4)
prescription topical antiviral cremes for herpes labialis or oral
herpes, commonly referred to as cold sores; (5) prophylactic herpes
vaccines; (6) OTC H-2 blockers; (7) topoisomerase I inhibitors
marketed or in development for the treatment of ovarian, non-small
cell lung, colorectal and other solid tumor cancers; (8) drugs for the
treatment of irritable bowel syndrome ("IBS"); and (9) triptan drugs
for the treatment of migraine headaches. The proposed Consent Order
would remedy the alleged violations by replacing the lost competition
that would result from the merger in each of these markets.
At the same time it accepted the Consent Agreement for public comment,
the Commission indicated that it would continue to investigate the
potential effects of this merger in the area of smoking cessation
products, which are used by consumers for assistance in quitting
smoking. Upon further review of this matter with respect to smoking
cessation products, it now appears that no further action is warranted
by the Commission at this time. Accordingly, the investigation has
been closed with respect to smoking cessation products. This action
should not be construed as a determination that a violation may not
have occurred with respect to smoking cessation products, just as the
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6
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ANALYSIS
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EXTRACTED KEY WORDS
GAS PURCHASES NATURAL GAS REGULATORS GAS TRANSPORTATION GULF SOUTH COMMISSION KOCH COMPLAINT SUPPLIES PIPELINE PROPOSALS ELECTRICITY AGREEMENT LOUISIANA COMPLAINT ALLEGES PRICES SUBSIDIARIES EKLP MISSISSIPPI COSTS CONSENT AGREEMENT KOCH ENERGY TRADING JOINT VENTURE MARKET REQUEST CONTRACT SHORT-TERM PURCHASES PLANNING DOCUMENTS |
_________________________________________________________________
ANALYSIS OF THE COMPLAINT AND CONSENT ORDER
TO AID PUBLIC COMMENT
_________________________________________________________________
I. Introduction
The Federal Trade Commission has accepted for public comment an
Agreement Containing Consent Order ("Consent Agreement") with Entergy
Corporation and Entergy-Koch, LP ("EKLP"), a limited partnership owned
equally by Entergy and Koch Industries, Inc., and has issued a
Complaint and the Decision and Order ("Order") contained in the
Consent Agreement. The Order seeks to remedy the anticompetitive
effects of EKLP's acquisition from Koch of the Gulf South Pipeline
Company, LP (formerly the Koch Gateway Pipeline Company and referred
to herein as "Gulf South"). As a result of this acquisition, Entergy
will own 50 percent of the Gulf South pipeline, a major natural gas
pipeline serving Entergy's regulated utilities in Louisiana and
Mississippi. The Order requires Entergy to adopt an open-solicitation
process for its purchase of natural gas and gas transportation.
Adoption of these measures will avoid affiliate bias in Entergy's
purchase of gas supplies and the resulting higher energy prices.
II. Description of the Parties and the Proposed Joint Venture
Entergy, a Delaware corporation, is engaged in the generation,
transmission, and distribution of electricity. Entergy provides retail
electric service to customers in portions of Arkansas, Louisiana,
Mississippi, and Texas. Entergy also owns the local natural gas
distribution utility in New Orleans and Baton Rouge, Louisiana. In
1999, Entergy had revenues of approximately $8.77 billion and net
income of approximately $595 million.
Koch is a privately held corporation headquartered in Wichita, Kansas.
Through its subsidiaries and affiliates, Koch markets natural gas,
natural gas transportation, chemicals, petroleum products, minerals,
and financial services. Koch conducts its natural gas business through
Koch Energy Trading and Gulf South. Koch Energy Trading markets
natural gas, electric power, and weather derivatives. Gulf South owns
and operates the Gulf South pipeline (formerly known as the Koch
Gateway pipeline). The Gulf South pipeline consists of about 10,000
miles of natural gas pipeline serving parts of the states of Texas,
Louisiana, Mississippi, Alabama and Florida.
On May 26, 2000, Entergy and Koch entered into an agreement to form
EKLP. Pursuant to that agreement, EKLP will acquire, among other
things, Entergy Power Marketing Corporation (Entergy's subsidiary that
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