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American Government Topic:  Gasoline, Robert Pitofsky

FTC Chairman Testifies Before Senate Committee on Merger Enforcement in the Gasoline Industry

Agency: Federal Trade Commission
Date: 25 April 2001
Federal Trade Commission Chairman Robert Pitofsky presented the Commission's testimony today before the Senate Subcommittee on Consumer Affairs, Foreign Commerce, and Tourism of the Committee on Commerce, Science, and Transportation concerning FTC merger enforcement in the gasoline industry. The Commission's testimony describes the FTC's past and present efforts to "maintain and protect a competitive environment in various gasoline markets."

The testimony describes the FTC's role in enforcing antitrust laws in energy industries, most often in analyzing mergers. According to the testimony, the FTC will intervene to challenge mergers that "reduce competition, result in higher prices, and injure the economy of the nation or any of its regions." In merger reviews, the Commission asks the specific question: "whether the result of a merger 'may be' -- i.e. it would be reasonably likely -- that the remaining firms in the industry could reduce output and raise prices to the detriment of consumers anywhere in the United States."

If mergers increase competition, the Commission will also consider "whether a merger will yield efficiencies that might counteract the merger's threatened anticompetitive effects." The testimony states that efficiencies "must be proven" and need to be "real," "substantial" and "cannot result from reductions in output, they cannot be practicably achievable by the companies independently of the merger, and they must counteract the merger's anticompetitive effect, not merely flow to the shareholders' bottom line."

In the testimony, the Commission states that nearly one-third of its total enforcement budget for the Bureau of Competition was spent on investigations in energy industries in FY 1999 and 2000, and the same levelcontinues this fiscal year. The FTC's investigations revealed "that several of these transactions threatened competition in local or regional markets" and the mergers were only allowed "after demanding significant changes that would fully restore the competition lost as a result of the merger."

The testimony discusses the action taken by the FTC in the Exxon and Mobil merger, stating that it is illustrative of "many of the issues, and difficulties, in large oil company mergers." Additionally, the testimony reviews the FTC's investigations of the BP/Amoco and BP/ARCO mergers, and the Shell/Texaco joint venture. The testimony concludes that through its efforts, particularly in Shell/Texaco and BP/ARCO, the Commission "helped preserve competition in several West Coast markets, both wholesale and retail."

The Commission vote to approve the testimony of Chairman Pitofsky at the hearing and submit prepared copies for the record was 5-0. Chairman Pitofsky's statement represents the views of the Federal Trade Commission. The Chairman's oral presentation and responses to questions are his own, and do not necessarily represent the views of the Commission or any other individual Commissioner.

NOTE: The testimony mentioned in this release and Chairman Pitofsky's opening statement are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC Matter No. P859910)



Media Contact:
Eric London,
Office of Public Affairs
202-326-2180
Staff Contact:
David Thomas,
Office of Congressional Relations
202-326-2195




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