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| Agency: Federal Trade Commission
Date: 26 June 2017 |
The divestiture order requires ACT to divest 70 CST fuel stations to Empire, and to give Empire the option of acquiring an additional location owned by ACT. The fuel stations to be divested are in Arizona, Colorado, Florida, Georgia, Louisiana, New Mexico, Ohio, and Texas.
According to the complaint, the geographic markets for the retail sale of gasoline and diesel are localized, generally ranging from a few blocks to a few miles. The complaint alleges that without a remedy the merger would significantly increase market concentration for the retail sales of gasoline or diesel in each of the 71 local markets, resulting in a monopoly in ten markets and reducing the number of competitors in the rest to two or three.
Retail fuel stations compete on price, convenience store format, product offerings, and location, and they pay close attention to nearby competitors. The complaint alleges that without the divestiture the merger would allow the combined entity to raise prices unilaterally in markets where CST is ACT’s only or closest competitor, and increase the likelihood of coordinated effects in markets where three or two competitors would remain.
Headquartered in Quebec, Canada, ACT operates convenience stores and retail fuel stations worldwide, including nearly 4,700 in United States. Almost all the convenience stores, which operate primarily under the Circle K and Kangaroo Express banners, also sell retail fuel under a variety of company and third-party brands.
San Antonio, Texas-based CST operates 1,146 convenience stores and retail fuel stations in the United States. The convenience stores operate primarily under the Corner Store banner, while the fuel stations generally use the Valero brand.
Under the terms of the consent agreement, ACT has 75 days after the transaction closes or 14 days after the FTC’s consent agreement becomes final to divest to Empire CST’s retail fuel stations in 70 local markets. In Albany, Georgia, ACT’s retail fuel station was damaged by a tornado in early 2017 and the proposed divestiture agreement requires ACT to give Empire the option to buy this damaged site. If Empire declines, the proposed divestiture agreement prohibits ACT, for a period of ten years, from restricting the use of the property as a retail fuel station in any future sale.
Further details about the consent agreement, which includes an asset maintenance order and allows the Commission to appoint a monitor trustee, are set forth in the analysis to aid public comment for this matter.
The Commission vote to issue the complaint and accept the proposed consent order for public comment was 2-0. The FTC will publish the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through July 26, 2017, after which the Commission will decide whether to make the proposed consent order final. Comments can be filed electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $40,654.
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Nicholas Bush
Bureau of Competition
202-326-2848