Shell Oil Company, et al.; Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 981-0166]

Shell Oil Company, et al.; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged

violations of

[[Page 53921]]

federal law prohibiting unfair or deceptive acts or practices or unfair

methods of competition. The attached analysis to Aid Public Comment

describes both the allegations in the draft complaint that accompanies

the consent agreement and the terms of the consent order--embodied in

the consent agreement--that would settle these allegations.

DATES: Comments must be received on or before December 7, 1998.

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

Room 159, 6th St. and Pa. Ave., NW, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

William Baer, FTC/H-374, Washington, DC 20580 (202) 326-2932 or John

Hoagland, Dallas Regional Office, Federal Trade Commission, 1999 Bryan

St., Suite 2150, Dallas, TX 75201 (214) 979-9350.

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 complaint. An electronic copy of the full text of

the consent agreement package can be obtained from the FTC Home Page

(for October 1, 1998), on the World Wide Web, at ``http:/www.ftc.gov/

os/actions97.htm.'' A paper copy can be obtained from the FTC Public

Reference Room, Room H-130, Sixth Street and Pennsylvania Avenue, NW,

Washington DC 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 Shell Oil Company (``Shell'') and Tejas Energy, LLC

(``Tejas''), a wholly owned subsidiary of Shell, an agreement

containing Consent Order designed to remedy the anticompetitive effects

resulting from Shell and Tejas' proposed acquisition of certain gas

gathering assets of The Coastal Corporation (``Coastal''). The Consent

Order requires the divestiture of approximately 171 miles of Coastal's

gas gathering pipeline in western Oklahoma and the Texas panhandle to a

Commission-approved buyer.

This agreement has been placed on the public record for sixty (60)

days for the receipt 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

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

from the agreement or make final the agreement's Order.

On January 20, 1998, Transok, LLC (``Transok''), a wholly-owned

subsidiary of Tejas, and ANR Field Services Company and ANR Production

Company (collectively referred to as (``ANR''), subsidiaries of

Coastal, entered into a Letter of Intent for Transok to acquire gas

gathering assets of ANR located in Oklahoma, Texas, and Kansas. Gas

gathering is the pipeline transportation of natural gas from a wellhead

or central delivery point to a gas transmission pipeline or gas

processing plant. The Commission found that the acquisition may create

competitive problems in parts of Roger Mills, Beckham, Custer, Washita,

Caddo and Grady Counties, Oklahoma, and Wheeler County, Texas

(hereafter referred to as the overlap counties). The Commission's

Complaint alleges that Transok's acquisition agreement with ANR

violates Section 5 of the Federal Trade Commission Act, as amended, 15

U.S.C. 45, and the acquisition, if consummated, would violate Section 5

of the Federal Trade Commission Act and Section 7 of the Clayton Act,

as amended, 15 U.S.C. 18.

With the overlap counties, Tejas, through its subsidiary Transok,

is the largest gas gatherer and Coastal, through its ANR subsidiaries,

is a substantial competitor in gas gathering. Six areas were identified

where gas producers could only turn to Tejas and Coastal or, at most,

one other gas gatherer, for gas gathering services. In these areas, the

proposed merger would eliminate competition between Tejas and Coastal

in providing gas gathering services to gas producers and would likely

lead to anticompetitive increases in gathering rates and an overall

reduction in gas drilling and production. It is unlikely that the

competition eliminated by the proposed acquisition would be replaced by

new entry into the gas gathering market in these areas.

The proposed Consent Order requires Shell and Tejas to divest parts

of the ANR pipeline system within these six areas. 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. The purposes of the divestiture are to ensure the continued use

of the Schedule A assets as gas gathering assets and to remedy the

lessening of competition resulting from the acquisition.

Shell and Tejas must divest the assets by January 5, 1999, or

thirty days following the consummation of the acquisition, whichever is

later. If Shell and Tejas fail to divest the assets 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. Shell and Tejas have 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 sold.

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.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 98-26854 Filed 10-6-98; 8:45 am]

BILLING CODE 6750-01-M