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1
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PITOFSKY - STATEMENT
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EXTRACTED KEY WORDS
COMMISSION COMPETITION OIL MERGER INDUSTRY STATIONS RESTRUCTURING DIVESTITURES MARKET CONSENT MOBIL ASSETS GASOLINE ANTITRUST REVIEW CALIFORNIA SALE TERMINALING ANTICOMPETITIVE EFFECTS METROPOLITAN AREAS PLEADING TREND FIRMS OVERLAPS REFINING AMOUNT SOLD CONTRACTS ASSIGNMENT |
STATEMENT OF CHAIRMAN ROBERT PITOFSKY AND
COMMISSIONERS SHEILA F. ANTHONY AND MOZELLE W. THOMPSON
EXXON/MOBIL
The Federal Trade Commission has issued a consent order to settle charges that the Exxon
Corporation's acquisition of the Mobil Corporation would violate the antitrust laws. We write to
explain the reasons for our decision to approve a settlement that allows the merger to occur, and
to ensure that the Commission's action in this matter is fully understood.
The merger between Exxon and Mobil involves the second- and fourth-largest vertically
integrated oil companies in the world and the two largest headquartered in the United States, with
the acquired assets valued at about $80 billion. We emphasize, however, that Commission
approval in this matter does not indicate that continuing trends toward undue and unjustified
concentration will be countenanced by this agency in the oil industry or elsewhere in the United
States economy.
The merger has significant competitive effects in seven different product markets.
Because these were markets where competition was likely to be affected adversely, the
Commission has required extensive restructuring. The details of the divestitures and other
remedial provisions designed to address those competitive problems were summarized in the
Analysis to Aid Public Comment. We touch here only on the most significant reasons why a
merger between such large companies that have been direct competitors in some markets is
allowed to occur at all.
1. About 60 percent of the assets of the merged firms were located outside the United
States. Competitive effects in foreign countries have been reviewed by antitrust
1
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ORDER TO HOLD SEPARATE
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EXTRACTED KEY WORDS
MOBIL AGREEMENT SEPARATE BUSINESS CONSENT AGREEMENT COMMISSION ASSETS EXXON SEPARATE TRUSTEE TERMINALS EMPLOYEES ACT CLAUSE PURPOSES MANAGER MARKETING COMPETITIVENESS SUBPARAGRAPH SERVICE STATIONS MATERIAL CONFIDENTIAL INFORMATION SERVICE STATION FACILITIES FEDERAL TRADE COMMISSION RETAIL ASSETS CONTRACTUAL RIGHTS FIELD OFFICE SUPPORT PROPOSED MERGER DISTRIBUTION TERMINALS OBLIGATIONS FUELS MARKETING SERVICE CONTRACTS |
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 ))
Exxon Corporation, )
a corporation, )) Docket No. C-3907
and ) ORDER TO HOLD SEPARATE
) AND MAINTAIN ASSETS
Mobil Corporation, )
a corporation. )
____________________________________)
The Federal Trade Commission having initiated an investigation of the proposed merger of
Respondents Exxon Corporation and Mobil Corporation, and Respondents having been furnished
thereafter with a copy of a draft of Complaint that the Bureau of Competition presented to the
Commission for its consideration and which, if issued by the Commission, would charge
Respondents with violations 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
Respondents, their attorneys, and counsel for the Commission having thereafter executed
an Agreement Containing Consent Orders ("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
The Commission having thereafter considered the matter and having determined that it had
reason to believe that Respondents have violated the said Acts, and that a Complaint should issue
stating its charges in that respect, and having determined to accept the executed Agreement
Containing Consent Orders and to place such Consent Agreement on the public record for a
period of sixty (60) days, the Commission hereby issues its Complaint, makes the following
jurisdictional findings and issues this Order to Hold Separate and Maintain Assets ("Hold
Separate"):
Page
1. Respondent Exxon Corporation is a corporation organized, existing and doing
business under and by virtue of the laws of the State of New Jersey, with its office
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4
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DECISION & ORDER
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EXTRACTED KEY WORDS
EXXON AGREEMENTS MOBIL MARKETING ASSETS COMMISSION CONSENT ORDERS TRADE ACQUIRER BRANDED FUELS RETAIL SITES DIVESTITURE PROPOSED MERGER JET TURBINE OILS BRAND EXXON CALIFORNIA REFINING BUSINESS FORMAT FRANCHISE MOBIL TEXAS FEDERAL TRADE COMMISSION SUBPARAGRAPH BRANDED SELLERS TEXAS MSAS LESSEE DEALERS MID-ATLANTIC MARKETING ASSETS NORTHEAST MARKETING ASSETS COMPETITION SUPPLY AGREEMENTS RESPONDENTS EXECUTE CREDIT CARD SERVICES EXXON GUAM |
991 0077
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
Exxon Corporation, Docket No. C-3907
a corporation, DECISION AND ORDER
and
Mobil Corporation,
a corporation.
The Federal Trade Commission having initiated an investigation of the proposed merger
involving Respondents, Exxon Corporation and Mobil Corporation, and Respondents having been
furnished thereafter with a copy of a draft of Complaint that the Bureau of Competition presented
to the Commission for its consideration and which, if issued by the Commission, would charge
Respondents with violations 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
Respondents, their attorneys, and counsel for the Commission having thereafter executed an
Agreement Containing Consent Orders ("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
The Commission having thereafter considered the matter and having determined that it had
reason to believe that the Respondents have violated the said Acts, and that a Complaint should
issue stating its charges in that respect, and having thereupon issued its Complaint and its Order
to Hold Separate and Maintain Assets and accepted the executed Consent Agreement and placed
such Agreement on the public record for a period of sixty (60) days for the receipt and
Page 2
consideration of public comments, and having duly considered the comments filed thereafter by
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5
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COMPLAINT
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EXTRACTED KEY WORDS
MOBIL MERGER TRADE COMMISSION ACT FEDERAL TRADE COMMISSION CLAYTON ACT MOTOR GASOLINE VIOLATION CRUDE OIL AREAS CONTAINED THEREIN LIGHT PETROLEUM PRODUCTS MARKETING COMPETITION RESPONDENT EXXON BUSINESS JET TURBINE OIL PROPOSED MERGER POTENTIAL COMPETITORS LIKELIHOOD TRANSPORTATION UNITED STATES METROPOLITAN AREAS TERMINALING UNILATERALLY EXERCISE MARKET AGREEMENT PARAFFINIC BASE OIL REFINED LIGHT PETROLEUM LESSEN COMPETITION CALIFORNIA ALASKAN NORTH SLOPE |
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
____________________________________
In the Matter of ))
Exxon Corporation, )
a corporation, )) Docket No. C-3907
and ))
Mobil Corporation, )
a corporation. )
____________________________________)
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 Exxon Corporation ("Exxon"), a corporation, and
respondent Mobil Corporation ("Mobil"), a corporation, both subject to the jurisdiction of the
Commission, have entered into an agreement and plan of merger, 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, and that a proceeding in respect thereof would be in the public interest,
hereby issues its complaint, stating its charges as follows:
Exxon Corporation
1. Respondent Exxon is a corporation organized, existing and doing business under and by
virtue of the laws of the State of New Jersey, with its principal place of business at 5959
Las Colinas Boulevard, Irving, Texas 75039.
2. Respondent Exxon is, and at all times relevant herein has been, engaged in the business of
refining, transporting, distributing, and marketing crude oil and refined petroleum
products, including gasoline, jet fuel, other light petroleum products, paraffinic base oil,
and jet turbine oil, in the United States.
3. Respondent Exxon 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, 15 U.S.C. § 44.
Page 2
Mobil Corporation
4. Respondent Mobil 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 at 3225
Gallows Road, Fairfax, Virginia 22037.
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AGREEMENT CONTAINING CONSENT
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EXTRACTED KEY WORDS
RESPONDENTS EXXON AGREEMENT MOBIL CONSENT ORDERS COMMISSION BUSINESS MARKETING ASSETS PROPOSED RESPONDENTS TRADE DIVEST ACQUIRER DIVESTITURE RETAIL SITES PROPOSED MERGER BRANDED FUELS EXXON CALIFORNIA REFINING JET TURBINE OILS FEDERAL TRADE COMMISSION LESSEE DEALERS RESPONDENTS EXECUTE MID-ATLANTIC MARKETING ASSETS NORTHEAST MARKETING ASSETS BRANDED SELLERS BUSINESS FORMAT FRANCHISE SUPPLY AGREEMENTS EXXON GUAM SUBPARAGRAPH CREDIT CARD SERVICES |
UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION
In the Matter of ))
Exxon Corporation, )
a corporation, )) File No. 991-0077
and ))
Mobil Corporation, )
a corporation. )
AGREEMENT CONTAINING CONSENT ORDERS
The Federal Trade Commission ("Commission"), having initiated an investigation of the
proposed merger involving Exxon Corporation ("Exxon") and Mobil Corporation ("Mobil"), and
it now appearing that Exxon and Mobil, hereinafter sometimes referred to as "Proposed
Respondents," are willing to enter into this Agreement Containing Consent Orders ("Consent
Agreement") to divest certain assets and providing 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 Exxon Corporation is a corporation organized, existing and doing
business under and by virtue of the laws of the State of New Jersey, with its office and
principal place of business located at 5959 Las Colinas Boulevard, Irving, Texas 75039.
2. Proposed Respondent Mobil Corporation is a corporation organized, existing and doing
business under and by virtue of the laws of the State of Delaware, with its office and
principal place of business located at 3225 Gallows Road, Fairfax, Virginia 22037.
3. Proposed Respondents admit all the jurisdictional facts set forth in the draft of Complaint
here attached.
4. Proposed Respondents waive:
a. any further procedural steps;
b. the requirement that the Commission's Order to Hold Separate and Maintain
Assets and Decision & Order, here attached and made a part hereof, contain a
statement of findings of fact and conclusions of law;
c. all rights to seek judicial review or otherwise to challenge or contest the validity
Page 2
the Order to Hold Separate and Maintain Assets or Decision & Order entered
pursuant to this Consent Agreement; and
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7
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SWINDLE - STATEMENT
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EXTRACTED KEY WORDS
GASOLINE PRICES COMPETITION RETAIL COMPLAINT COMMISSION MODERATE CONCENTRATION WHOLESALING MARKET MAJOR BRANDS OIL MOBIL SUBSTANTIALLY LESSEN COMPETITION EXXON UNITED STATES ALLEGES METROPOLITAN AREAS COMPLAINT ALLEGATIONS RETAIL GASOLINE STATIONS PRESUMPTION REFINING COMPETITIVE HARM ARIZONA PRICE ZONES BRITISH PETROLEUM REGARD TEXAS HORIZONTAL MERGER GUIDELINES MSAS |
SEPARATE STATEMENT OF COMMISSIONER ORSON SWINDLE
in Exxon Corporation, Dkt. No. C-3907
In this matter, the Commission investigated the $80 billion merger between
Exxon Corporation ("Exxon") and Mobil Corporation ("Mobil"). The merger created the largest
privately owned oil company in the world, having extensive operations in terms of exploration,
production, refining, pipelines, terminal operations, wholesaling, and retailing. The Commission
has issued a consent order to resolve complaint allegations with regard to a number of markets in
which Exxon and Mobil had overlapping operations.
Of the great many markets that are addressed in the complaint and consent order, I
only from the provisions concerning the wholesaling and retailing of gasoline in markets that
would be only moderately concentrated after the merger. The merger between Exxon and Mobil
is not likely to lead to consumer harm in the form of higher prices for gasoline in these markets
because of the difficulties that oil companies face in coordinating their prices in these markets.
Unlike my colleagues, I therefore would not require that ExxonMobil divest or assign its retail
gasoline stations located in these markets.
1. Wholesale and Retail Marketing of Gasoline
The complaint alleges that the merger between Exxon and Mobil may substantially lessen
competition for the wholesaling and retailing of gasoline in many and various markets.
Specifically, the complaint defines as a relevant geographic market each of the states from
Virginia to Maine, "smaller areas" within those states including particular metropolitan areas, and
even "smaller areas" within those metropolitan areas. ¶¶ 17a, 18, 31, and 32 of the complaint. It
also defines as relevant geographic markets five metropolitan areas in Texas,
and "smaller areas" contained within those metropolitan areas. Id. ¶¶ 17b, 19, 33, and 34.
The complaint further defines Arizona and "smaller areas" within Arizona as relevant geographic
markets. Id. ¶¶ 17c, 21, 35, and 36.
In analyzing the competitive effects of a merger, it is critical to identify the proper
geographic markets. As explained above, the Commission alleged that the proper geographic
markets here include everything from entire states to metropolitan areas within these states to
"smaller areas" within these metropolitan areas, which presumably include counties, cities, towns,
townships, price zones, etc. A geographic market is "a region such that a hypothetical
monopolist that was the only present or future producer of the relevant product at locations in
that region would profitably impose at least a `small but significant and non-transitory increase in
price.'" United States Department of Justice and Federal Trade Commission, Horizontal Merger
Guidelines § 1.21 (1992).
Rather than very large geographic areas (e.g., entire states)1 or very small geographic
areas (e.g., price zones), I think that standard metropolitan statistical areas ("MSAs") are the
most appropriate areas to use as geographic markets. MSAs are consistent with the general
boundaries of competition in the wholesaling and retailing of gasoline. Using MSAs as
geographic markets also promotes greater consistency in analysis because most oil industry data
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8
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APPENDICES AND ATTACHMENT
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EXTRACTED KEY WORDS
RESPONDENTS MANAGER SUPPORT NBUS AGREEMENT PERSONNEL MOBIL PROVIDERS FUELS CONTRACT CUSTOMER SUPPLYING EXCHANGE AGREEMENTS RETAIL SITES MIDWEST NBU SALES CONSENT AGREEMENT MONITOR DELIVERIES MARKETING EXXON DIVESTITURE THIRD PARTY COORDINATION EMPLOYEE ASSETS PRICING PERFORMANCE ANALYSIS COMPETING |
APPENDIX A
I. The included support services required by Paragraph I.J.6 of this Hold Separate
provided to the Held Separate Business by support services units and personnel who
been selected or approved by the Manager, including those described and identified
A. Mobil's East/Southwest Inventory - Gasolines Unit, which wilI (1) schedule
monitor fuels product deliveries to terminals within the NBUs and notify
any product acquisition needs beyond existing supply and exchange agreements
(Respondents will use existing price formulas set forth in Appendix B
(Confidential) to charge the Held Separate Business for any product
Held Separate Business may in its discretion request from Respondents), and
(2) monitor and implement existing fuels product exchange agreements and
into any new exchange agreements required by the Held Separate Business;
B. Mobil I s existing Fuels Customer Support and Fuels Delivery Operations
Center Units, which are located at the MaIvem Corporate and Administrative
Center, which will receive and process customer orders for Branded Fuels
products, schedule trucks and deliveries to Retail Sites within the NBUs,
provide customer billing, collections and other customer services to the
also will supply such services under contract to the Mobil's Midwest NBU
is not part of the Held Separate Business);
C. Mobil I s existing Fuels Pricing Unit, which will collect pricing data and
recommend prices to the NBUs, subject to review by the Manager, with the
exception of the personnel who are responsible .for pricing fuels products
Mobil's Midwest NBU;
D. Mobil I s existing Retail Operations & Information Services Unit, which will
handle administration and retail accounting for company operated Retail
within the NBUs; it also will supply such services under contract to Mobil's
Midwest NBU (which is not part of the Held Separate Business);
E. Mobil ' s existing Point of Sale ("POS") Support Unit, which will provide
technology support services maintenance of POS and Speedpass systems; it will
also supply such services under contract to the Mobil's Midwest NBU
not part of the Held Separate Business);
F. The following personnel from Mobil's existing Business & Performance Analysis
Unit, who will provide competitive and financial performance analysis,
and strategic planning for the Held Separate Business (e.g., balanced
volume, and shared services reporting) and to monitor the funds as
Paragraph 1I.B. 10 of the Hold Separate:
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ANALYSIS
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EXTRACTED KEY WORDS
EXXON PROPOSED ORDER MARKETING MOBIL RESPONDENTS MERGER COMMISSION COMPETITION DIVESTITURE AGREEMENT BASE OIL ASSETS COMPLAINT REFINING PRICE CONSENT ORDERS LIGHT PETROLEUM PRODUCTS UNITED STATES METROPOLITAN AREAS CALIFORNIA MID-ATLANTIC2 JET TURBINE OIL PENDING DIVESTITURE ANTICOMPETITIVE EFFECTS TERMINALING TRADE COMMISSION ACT PRESERVE COMPETITION FEDERAL TRADE COMMISSION CARB GASOLINE |
ANALYSIS OF PROPOSED CONSENT ORDER
TO AID PUBLIC COMMENT
I. Introduction
The Federal Trade Commission ("Commission" or "FTC") has issued a complaint
("Complaint") alleging that the proposed merger of Exxon Corp. ("Exxon") and Mobil Corp.
("Mobil") (collectively "Respondents") would violate Section 7 of the Clayton Act, 15 U.S.C.
§ 18, and Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, and has entered into
an agreement containing consent orders ("Agreement Containing Consent Orders") pursuant to
which Respondents agree to have entered and be bound by a proposed consent order ("Proposed
Order") and a hold separate order that requires Respondents to hold separate and maintain certain
assets pending divestiture ("Order to Hold Separate"). The Proposed Order remedies the likely
anticompetitive effects arising from Respondents' merger, as alleged in the Complaint. The Order
to Hold Separate preserves competition in the markets for refining and marketing of gasoline, and
in other markets, pending divestiture.
II. Description of the Parties and the Transaction
Exxon, which is headquartered in Irving, Texas, is one of the world's largest integrated oil
companies. Among its other businesses, Exxon operates petroleum refineries that make various
grades of gasoline and lubricant base stock, among other petroleum products, and sells these
products to intermediaries, retailers and consumers. Exxon owns four refineries in the United
States; those four refineries can process approximately 1.1 million barrels of crude oil and other
feedstocks daily.1 Exxon owns or leases approximately 2,049 gasoline stations nationally and sells
gasoline to distributors or dealers that operate another 6,475 retail outlets throughout the United
States. During fiscal year 1998, Exxon had worldwide revenues of approximately $115 billion
and net income of approximately $6 billion.
Mobil, which is headquartered in Fairfax, Virginia, is another of the world's largest
integrated oil companies. Among its other businesses, Mobil operates petroleum refineries in the
United States, which make gasoline, lubricant base stock, and other petroleum products, and sells
those products throughout the United States. Mobil operates four refineries in the United States,
which can process approximately 800 thousand barrels of crude oil and other feedstocks per day.
About 7,400 retail outlets sell Mobil-branded gasoline throughout the United States. During
fiscal year 1998, Mobil had worldwide revenues of approximately $52 billion and net income of
approximately $2 billion.
1A "barrel" is an oil industry measure equal to 42 gallons. "MBD" means thousands of
barrels per day.
1
On or about December 1, 1998, Exxon and Mobil entered into an agreement to merge the
two corporations into a corporation to be known as Exxon Mobil Corp. This merger is one of
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