Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: ArcLight Energy Partners must divest Gulf Oil terminals, (Dec 28, 2015)
Organizations Mentioned:Arc Logistics Partners L.P. | Arc Logistics Partners, LP | ArcLight Energy Partners Fund VI, L.P. | Gulf Oil Limited Partnership
By Greg Hammond, J.D.
Energy investor ArcLight Energy Partners Fund VI, L.P. has agreed to divest four light petroleum product terminals in Pennsylvania, settling FTC claims that ArcLight’s acquisition of Gulf Oil Limited Partnership would likely be anticompetitive (In the Matter of ArcLight Energy Partners Fund VI, L.P., File No. 151 0149, Dkt. C-4563).
The effects of the acquisition, according to the FTC’s complaint, might be to substantially lessen competition and tend to create a monopoly in each relevant market—the gasoline terminaling services market and distillate terminaling services market—in violation of Section 7 of the Clayton Act and Section 5 of the FTC Act. In particular, the transaction could increase the likelihood that ArcLight would unilaterally exercise market power in each relevant market and increase the likelihood of collusive or coordinated interactions between any remaining competitors in the relevant markets.
The settlement and order require that within 20 days of the acquisition date, ArcLight must divest the terminals in Altoona, Mechanicsburg, Pittston Township, and Williamsport, Pennsylvania, to Arc Logistics Partners LP. Terminals are critical to the efficient distribution of light petroleum products, according to the FTC, because they are capable of receiving bulk shipments of light petroleum products via pipeline, holding these products in storage tanks, and loading smaller quantities onto tanker trucks.
To ensure that the divested terminals remain viable and competitive, ArcLight has also agreed to maintain minimum throughput volumes at the terminals for two years; to supply Arc Logistics with renewable fuels that may be blended with light petroleum products for five years; and to allow any ArcLight and Gulf customers in the Altoona, Scranton, and Harrisburg markets to cancel their terminaling service contract without penalty for six months after the divestiture so that Arc Logistics may compete for these customers.
Companies: ArcLight Energy Partners Fund VI, L.P.; Gulf Oil Limited Partnership; Arc Logistics Partners L.P.
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