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SAN RAMON, Calif. -- Late last week, Chevron announced it was axing plans to acquire 122 stations from USA Petroleum in California. Although company spokeswoman Stephanie Price told The Associated Press the drop was "for business reasons," others involved with the purchase believe it may be due to a Federal Trade Commission (FTC) investigation into Chevron's planned acquisition.
"There is a provision in the purchase and sales agreement with Chevron that allows either party to withdraw if it appears resistance from the FTC is going to be more than is reasonable or tolerable," Mark Conant, the president of USA Petroleum, told Contra Costa Times. "Chevron decided we were at that point."
According to Price, Chevron made its pre-merger notification filing, but the FTC had not completed its review. "We subsequently withdrew our FTC filing," she told the paper.
The deal between Chevron and USA Petroleum, which was announced in mid-July, planned to have the stations fly the Chevron or Texaco banner. CSNews Online reported at the time that Chevron had completed the transaction, and would revamp the stations to new image standards along with a rebrand to Texaco or Chevron banners. A majority of the sites are unbranded, but some fly the Chevron or Shell banner. The purchase price for the stations was never disclosed.
At the time, USA Petroleum owner John Moller said: "After nearly 50 years, I believe it is appropriate to sell some of our retail gas station holdings, and I believe that the transition to Chevron also will be good for my customers and station employees."
Last month, Sen. Barbara Boxer, D-Calif ., asked the FTC last month to investigate the acquisition, as she felt large oil companies in California, including Chevron, could be dominating the market with their large number of gas stations, thus leading to anti-competitive business practices.
Chevron's public relations and event manager, Gus Santoyo, told CSNews Online at the time "The FTC is thoroughly reviewing the deal and the company is fully cooperating with the FTC and the review."
In her letter, Boxer stated that the retail gas market is ruled by large branded refiners. Seven major refiners, Chevron included, make up nearly 90 percent of retail gas sold in the state through supply contracts or their own retail stations, according to Boxer. "This means that large branded refiners have a significant effect on retail gas prices in California by virtue of their dominant position in the market," she said. California has about 10,000 gas stations, 1,500 of which under the Chevron or Texaco name, according to Chevron.
The acquisition of USA Petroleum and its assets, including its retail stations, "could further diminish independent unbranded retailers' market position and present potential anti-competitive effects for consumers, including higher retail prices," Boxer concluded.
On the news of the termination, Boxer said "Finally, there is some good news for the consumer with the termination of this proposal." She added "I believe consumers will be better served without a continuation of consolidation that has eroded the competitive gas market over the past decade."
Calls for comment from both Chevron and USA Petroleum were not returned by press time.