FTC ends action against Giant-Western Refining merger

Nick Snow
Washington Correspondent

WASHINGTON, DC, Oct. 5 -- Citing a need to allocate resources to other competition matters, the US Federal Trade Commission ended its administrative action against the merger of Giant Industries Inc. and Western Refining Inc. by a 3-2 vote on Oct. 2.

The commission returned the matter to adjudication and dismissed the complaint, effectively terminating opposition to the combination, which the two refiners announced on Aug. 28, 2006, and completed on May 31, 2007.

The FTC initially expressed concern that a Giant-Western merger would restrict competition in northern New Mexico and sought a preliminary injunction against it earlier this year. The federal district court in that state denied the petition on May 29, ruling that the commission's market concentration case was weak (OGJ Online, May 30, 2007). After a higher court refused to hear its appeal, the FTC withdrew the matter from administrative litigation on June 7 to consider whether further proceedings would be in the public's interest.

In its majority statement, the commission said that it still disagreed with the New Mexico district court's decision but added that the merger does not raise important issues of fact, law, or merger policy that need resolution in further administrative proceedings.

New information that came to light during the preliminary injunction petition's discovery period also argues against further administrative proceedings, it said. "For example, new information suggests that the Plains Pipeline, which runs from El Paso to Albuquerque, may begin work on a capacity expansion project more quickly than originally thought," it said. A finding that the pipeline was capacity-constrained and fully utilized had been a cornerstone of the staff's case at the court hearing, it noted.

But the decision to end administrative action and dismiss the complaint ultimately grew from a conclusion that further proceedings "would require substantially more resources, which should instead be reallocated to new competition matters, including in particular other gasoline matters," the majority statement said.

In their dissent, commissioners Pamela Jones Harbour and J. Thomas Loach said the complaint should not be dismissed because the merger violated Sec. 7 of the Sherman Antitrust Act by eliminating Giant "as a potential maverick who had the ability to reduce gasoline prices in Albuquerque."

Contact Nick Snow at nsnow@cox.net.

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