Attorney General Lockyer Files Antitrust Complaint to Keep BP Amoco – Arco Merger From Creating Crude Oil Monopoly Harmful to California Refiners

Monday, February 7, 2000
Contact: (415) 703-5837, agpressoffice@doj.ca.gov

(SAN FRANCISCO) – Attorney General Bill Lockyer today asked the federal court to block the merger of BP Amoco and Atlantic Richfield Co. (ARCO), alleging that the deal would violate antitrust laws by lessening competition in Alaska North Slope crude oil exploration, production and sales to West Coast refineries.

California filed the antitrust complaint along with the states of Washington and Oregon in the U.S. District Court, Northern District of California, in San Francisco. The Federal Trade Commission also has asked the federal court for a preliminary injunction to prevent the merger of London-based BP Amoco and ARCO of Los Angeles.

"The merger as presently proposed would result in a harmful monopoly of Alaska North Slope crude oil supplied to California refiners," Lockyer said. "Californians already feel the pinch from the lack of competition among the major oil refiners in the state. We are concerned this latest oil company merger will result in a major loss of competition and greater squeeze of the West Coast."

BP Amoco and ARCO entered into a merger agreement on March 31, 1999 in a transaction valued at about $26 billion. The oil companies were set to complete the merger on February 8, 2000. California, Oregon, Washington and the FTC have been involved in an extensive investigation of the merger and negotiations to reach a settlement.

The states' complaint alleges that the merger will eliminate ARCO as a major competitor on the Alaska North Slope and result in BP further increasing its control over crude oil production, supplies and sales to West Coast refiners. Among other things, the complaint alleges that BP's monopoly power can be seen in the sale of crude oil to targeted West Coast refiners. While lower prices are charged of refiners with flexibility in crude oil supplies, the highest prices are charged to West Coast refiners with the least ability to substitute for ANS crude. The monopoly power also is seen in the export of ANS crude to Asia at a lower price in order to restrict supplies to the West Coast.

The complaint may be viewed on the Attorney General's web site at http://caag.state.ca.us.

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