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FTC says April 13 it has cleared merger of BP Amoco, ARCO ARCO’s Alaska assets to be sold to Phillips Petroleum; ARCO’s Cushing, Okla., pipeline interests to be divested Petroleum News Alaska
The Federal Trade Commission said April 13 that it had accepted a proposed consent order that would remedy the agency’s concerns about likely anticompetitive effects of the proposed $27 billion merger of BP Amoco p.l.c. and Atlantic Richfield Co. Under terms of the order, BP Amoco will divest all of ARCO’s assets relating to oil production on the North Slope to Phillips Petroleum Co. or another commission-approved purchaser. With limited exceptions, the commission said, divestitures must take place within 30 days. BP Amoco also will have to divest all ARCO assets related to its Cushing, Okla., crude oil business within four months.
Resolve competitive concerns “The sweeping wholesale divestitures called for by the consent order resolve the competitive concerns that initially led the commission to seek a preliminary injunction to block the proposed transaction,” said Richard Parker, director of the FTC’s Bureau of Competition.
The commission’s complaint listed concerns of lessened competition from the combination in a number of markets: production, sale and delivery of ANS crude; production, sale and delivery of crude oil used by targeted West Coast refiners; production, sale and delivery of all crude oil used on the West Coast; purchase of exploration rights on the North Slope; sale of crude oil transportation through the trans-Alaska pipeline system; development for commercial sale of natural gas on the North Slope; supply of crude oil pipeline transportation to, and crude oil storage in, Cushing, Okla.
Divesture complete within six months BP Amoco chief executive Sir John Browne said March 16 that in the company had agreed to sell ARCO’s interests in the Cushing storage terminal, together with various pipeline interests to Teppco Partners of Houston for $355 million.
The commission said that under the proposed order, BP Amoco would be required to divest ARCO’s complete, free-standing businesses, including oil and gas interests, tankers, pipeline interests, real estate, exploration data and selected long-term supply agreements. Most of the assets were to be divested within 30 days; all must be divested within six months.
To ensure that ARCO employees remain with the company after the transaction and become available for work for Phillips, the proposed consent order also requires that BP Amoco not solicit any ARCO employee for employment unless that employee was terminated by Phillips, that BP Amoco vest all current and future pension benefits and that it pay a bonus of not less than 35 percent of base salary for certain key ARCO employees.
The consent order prohibits reacquisition of any interests required to be divested for 10 years, without first giving notice to the commission.
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