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LOS ANGELES -- Senator Barbara Boxer (D-Calif.) issued a letter to the Federal Trade Commission (FTC) today, asking it to investigate Chevron's acquisition of USA Petroleum Corp. on grounds that the major oil companies such as Chevron are dominating the market, leading to anti-competitive business practices.
In response, Chevron's public relations and event manager, Gus Santoyo, told CSNews Online "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.
Independent unbranded stations in the state, including what was USA Petroleum, make up 10 percent of the retail gas market in California, she continued. "The presence of independent unbranded gas retailers, however, is important because they help maintain necessary price competition in the gas market."
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.
The acquisition landed 122 of USA Petroleum's California gasoline stations to Chevron, that has plans to operate the stations under the Texaco or Chevron banners, and revamp the sites with new image standards.
"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," said USA Petroleum owner John Moller at the time of the sale.
The majority of the USA Petroleum stations were unbranded, but a small number of the 122 were under the Shell or Chevron banner. California has about 10,000 gas stations, 1,500 of which under the Chevron or Texaco name, according to Chevron.