Phillips Petroleum Company; Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 961-0056]

Phillips Petroleum Company; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

-----------------------------------------------------------------------

SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair or deceptive acts or practices and unfair methods of

competition, this consent agreement, accepted subject to final

Commission approval, would require, among other things, the

Bartlesville, Oklahoma based company to divest approximately 160 miles

of its natural gas pipeline system in Oklahoma. The agreement settles

allegations that Phillips' acquisition of gas-gathering assets from ANR

Pipeline Company would substantially reduce competition for natural gas

gathering services in areas of five Oklahoma counties, because Phillips

and ANR are the only, or two of very few, companies that provide gas

gathering services in these areas. The Commission had alleged that the

acquisition could have resulted in higher rates and reduced drilling

and production.

DATES: Comments must be received on or before March 11, 1997.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

William J. Baer, Federal Trade Commission, H-374, 6th St. and Pa. Ave.,

N.W., Washington, D.C. 20580. (202) 326-2932.

George S. Cary, Federal Trade Commission, H-374, 6th St. and Pa. Ave.,

N.W., Washington, D.C. 20580. (202) 326-3741.

Phillip L. Broyles, Federal Trade Commission, S-2105, 6th St. and Pa.

Ave., N.W., Washington, D.C. 20580. (202) 326-2805.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Section 2.34 of

the Commission's Rules of Practice (16 CFR 2.34), notice is hereby

given that the above-captioned consent agreement containing a consent

order to cease and desist, having been filed with and accepted, subject

to final approval, by the Commission, has been placed on the public

record for a period of sixty (60) days. The following Analysis to Aid

Public Comment describes the terms of the consent agreement, and the

allegations in the accompanying complaint. An electronic copy of the

full text of the consent agreement package can be obtained from the

Commission Actions section of the FTC Home Page (for December 30,

1996), on the World Wide Web, at ``http://www.ftc.gov/os/actions/htm.''

A paper copy can be obtained from the FTC Public Reference Room, Room

H-130, Sixth Street and Pennsylvania Avenue, N.W., Washington, D.C.

20580, either in person or by calling (202) 326-3627. Public comment is

invited. Such comments or views will be considered by the Commission

and will be available for inspection and copying at its principal

office in accordance with Section 4.9(b)(6)(ii) of the Commission's

Rules of Practice (16 CFR 4.9(b)(6)(ii)).

Analysis to Aid Public Comment on the Provisionally Accepted Consent

Order

The Federal Trade Commission (``Commission'') has accepted for

public comment from Phillips Petroleum Co. (``Phillips'') an agreement

containing consent order. This agreement has been placed on the public

record for sixty (60) days for reception of comments from interested

persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement, the comments received, and will decide whether it should

withdraw from the agreement or make final the agreement's order.

The Commission's investigation of this matter concerns Phillips'

proposed acquisition, through its wholly-owned subsidiary, GPM Gas

Services Corp., of certain pipeline gathering systems owned by ANR

Pipeline Co. (``ANR''), a subsidiary of Coastal Corporation. Phillips

and ANR are engaged in gas gathering--the transportation of natural

gas, for their own or for others' use, from a wellhead or producing

area to a gas transmission pipeline or a gas processing plant. The

Commission's investigation of this matter found potential

anticompetitive problems in certain areas within the following Oklahoma

counties: Beaver, Ellis, Harper, Woods, and Woodward (``the Oklahoma

counties''). For certain gas and oil producers in the Oklahoma

counties, Phillips and ANR are the only, or two of very few, choices

available to provide gas gathering services. The Commission was

concerned that the proposed merger would eliminate competition between

Phillips and ANR in providing gas gathering services. The Commission

was also concerned that the proposed merger would lead to

anticompetitive increases in gathering rates to these producers, and an

overall reduction in gas drilling and production.

The Agreement Containing Consent Order would, if finally issued by

the Commission, settle charges alleged in the Commission's Complaint

that Phillips' acquisition of ANR's gas gathering systems substantially

lessened competition in the gathering of natural gas in the Oklahoma

counties. The nature of such competition to be preserved is the actual

and potential competition to provide gas gathering services to

producers and other customers. The Commission's Complaint further

alleges that Phillips' acquisition agreement with ANR violates Section

7 of the Clayton Act and Section 5 of the Federal Trade Commission Act.

The order accepted for public comment contains provisions that

would require Phillips to divest seven parts of a pipeline system,

consisting of approximately 160 miles of pipe within the Oklahoma

counties. The gas gathering assets to be divested are listed, with

accompanying maps showing the locations of the pipelines, in Schedule A

of the proposed Consent Order. Phillips must divest the assets by April

30, 1997 or 30 days following the consummation of the acquisition,

whichever is later. The divestiture must be made to a person approved

by the Commission and in a manner approved by the Commission. The

purposes of the divestiture are to ensure the continued use of the

Schedule A assets in the same type of business in which the assets are

used at the time of the acquisition, and to remedy the lessening of

competition resulting from the acquisition.

If Phillips does not divest the assets to a buyer acceptable to the

Commission by the deadline, the Commission may appoint a trustee to

sell the assets. The trustee may include additional assets with those

specified in Schedule A to assure the marketability, viability, and

competitiveness of the Schedule A assets so as to accomplish

expeditiously the remedial purposes of the order.

For ten (10) years from the date that the order becomes final, the

order would require prior Commission notification before Phillips could

[[Page 1460]]

acquire from any one person during any 18-month period more than five

miles of gas gathering pipelines located within certain portions of the

Oklahoma counties.

In a separate agreement with Phillips, the Commission expressed

concern that it might not have an adequate legal remedy if the proposed

acquisition were consummated prior to Commission action. Phillips has

agreed to maintain the assets that are being divested in their current

condition and provide gathering service at existing terms and

conditions to customers under contract with ANR until the Schedule A

assets are either sold or the Commission decides not to accept this

order.

The purpose of this analysis is to invite public comment concerning

the consent order. This analysis is not intended to constitute an

official interpretation of the agreement and order or to modify their

terms in any way.

Donald S. Clark,

Secretary.

[FR Doc. 97-606 Filed 1-9-97; 8:45 am]

BILLING CODE 6750-01-M