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Attorney General Lockyer Announces California Agreement in Exxon-Mobil Antitrust Case; Requires Divestment of Benicia Refinery, 368 Stations
(SAN FRANCISCO) – Attorney General Bill Lockyer today announced that Exxon and Mobil have agreed to special California concessions as a condition of their worldwide merger.
"Last week, my preliminary report on gasoline prices showed Californians paid $1.3 billion more this year, largely as a result of low competition and high concentration in the state's gasoline market," Lockyer said. "Today, we will take the first step on the road back to a consumer-friendly marketplace. The terms of our federal decree require Exxon, as a condition of its merger with Mobil, to relinquish its Benicia refinery and hand over its network of nearly 370 gasoline stations to a new owner. This is a new owner who is subject to approval by the Federal Trade Commission and my office."
Lockyer said that taking this action will require California oil companies to more actively compete for consumer business.
California was the only state to secure divestment of a refinery in the $81 billion Exxon-Mobil global merger, which had been under review since early this year by Attorney General Lockyer and the Federal Trade Commission. The FTC in its antitrust settlement addressed issues raised by the merger of Exxon, the largest U.S. oil company, and No. 2 Mobil for the West Coast, South and northeastern United States.
In another important step, Exxon and Mobil have committed to working with the Attorney General to address building better reserves of clean-burning CARB gasoline. The Attorney General's preliminary report on gasoline prices suggested improving strategic reserves to protect against the kind of price spikes that hit Californians this year. Lockyer said similar commitments will be sought from all California refiners.
Under California's proposed antitrust settlement submitted for federal court approval, Exxon will shed its Benicia refinery and some 368 gasoline stations currently owned or supplied by Exxon. The new buyer for the Benicia refinery is subject to prior approval by the California Attorney General and FTC. The new owner of the Benicia refinery would be assured crude oil supplies for 10 years to continue producing much-in-demand clean-burning "CARB" gasoline.
"This divestment plan begins the process of restoring competition to the California gasoline marketplace," Lockyer said. "If we can follow up with further pro-competitive, pro-consumer public policy decisions, we have a chance to win long-term price protection for California."
In addition to the Exxon Mobil merger, the Attorney General is investigating the pending merger of British Petroleum and ARCO.
MOBIL EXXON ANTITRUST SETTLEMENT AT A GLANCE
* Exxon is required within 12 months to divest its Benicia refinery and California gasoline distribution system involving some 368 service stations to a single buyer, subject to prior approval by the Attorney General and Federal Trade Commission.
* Exxon is required to withdraw completely from the northern California metropolitan areas of Santa Rosa, Oakland, San Francisco and San Jose, transferring approximately 75 company-owned stations to the new Benicia refinery owner.
* Outside of the four San Francisco metropolitan areas, Exxon is required to transfer to the new refinery owner its gasoline sales business now handled by "jobbers" who distribute gasoline to open dealers on behalf of the refiner.
* If a new Benicia refinery buyer cannot be found within the year, a trustee may be appointed by the federal district court subject to approval by the California Attorney General and the FTC. The trustee may at his or her discretion continue to seek a buyer or instead sell a "crown jewel" – Mobil's refining and marketing assets in the state.
* Exxon Mobil must make available to the new Benicia refinery buyer up to 100,000 barrels per day of Alaska North Slope crude oil for 10 years.
* Mobil must within nine months divest all of its interest in the Trans Alaska Pipeline System (TAPS). Exxon Mobil is prohibited from reacquiring Mobil's interest in TAPS or entering into any joint venture without notifying the FTC.
* Exxon Mobil is prohibited from selling Exxon-branded fuels in the state for 12 years following the date of divestiture; and Mobil-branded fuel for seven years at any California retail sites that were branded Exxon as of the date of the consent decree.
* Exxon operates the Benicia refinery with a capacity to process 129,500 barrels of oil a day, producing mostly CARB gasoline. Exxon supplies some 98 Exxon-owned or supplied stations in the San Francisco Bay Area; 55 stations in Central California; 24 stations on the Central Coast; 40 stations in the Los Angeles area; 37 stations in Northern California; 45 stations in Sacramento County; 39 stations in the San Joaquin County; and 30 stations in San Diego County.
* Mobil operates a refinery in Torrance near Los Angeles with a capacity to process 130,000 barrels a day and about 710 gasoline stations, mostly in Southern California. A majority of Mobil's refinery output is regular gasoline sold outside the state.