[Federal Register Volume 65, Number 69 (Monday, April 10, 2000)]
[Notices]
[Pages 18997-18998]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-8771]


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FEDERAL TRADE COMMISSION

[File No. 001 0080]


Duke Energy Corporation, 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 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 May 1, 2000.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 600 Pennsylvania Ave., NW, Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: Kristin Malmberg or Gary Kennedy, 
Federal Trade Commission, Southwest Region, 1999 Bryan St., Suite 2150, 
Dallas, TX 75201. (214) 979-9381 or 979-9379.

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 the accepted, subject 
to final approval, by the Commission, has been placed on the public 
record for a period of thirty (30) 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 March 31, 2000), on the World Wide Web, at ``http://www.ftc.gov/
ftc/formal.htm.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room H-130, 600 Pennsylvania Avenue, NW, Washington, 
D.C. 20580, either in person or by calling (202) 326-3627.
    Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania Ave., NW, 
Washington, D.C. 20580. Two paper copies of each comment should be 
filed, and should be accompanied, if possible, by a 3\1/2\ inch 
diskette containing an electronic copy of the comment. 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 Duke Energy Corporation (``Duke''), Phillips 
Petroleum Company (``Phillips''), and Duke Energy Field Services L.L.C. 
(``DEFS'' an agreement containing Consent Order designed to remedy the 
anticompetitive effects resulting from: (1) Duke and Phillips' proposed 
merger of all of their natural gas gathering and processing businesses 
into DEFS; and (2) Duke's proposed acquisition of certain gas gathering 
and processing assets in central Oklahoma currently jointly owned by 
Conoco Inc. (``Conoco'') and Mitchell Energy & Development Corporation 
(``Mitchell''). The Consent Order requires Duke to divest approximately 
2780 miles of gas gathering pipeline in Kansas, Oklahoma, and Texas.
    This agreement has been placed on the public record for thirty (30) 
days for the receipt of comments from interested persons. Comments 
received during this period will become part of the public record. 
After thirty (30) 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 December 16, 1999, Duke and Phillips signed a letter agreement 
to transfer their natural gas gathering and processing businesses to 
DEFS. Duke will be the majority owner of DEFS. The value of this 
transaction is approximately $6 billion. On December 21, 1999, Duke 
agreed to acquire Conoco and Mitchell's jointly held central Oklahoma 
gas gathering and processing assets. 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 merger and acquisition may create competitive problems 
in counties in Kansas, Oklahoma, and Texas. The Commission's complaint 
alleges that Duke, Phillips, and DEFS' merger agreement and Duke's 
acquisition agreement with Conoco and Mitchell violate Section 5 of the 
Federal Trade Commission Act, as amended, 15 U.S.C. 45, and the merger 
and 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.
    Seven relevant markets were identified where gas producers could 
only turn to the parties or, at most, to one other gas gatherer, for 
gas gathering services. In these areas, the proposed merger and 
acquisition would reduce competition in the provision of gas gathering 
services 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 merger and acquisition would be replaced by new entry into the 
gas gathering market in these areas.
    The proposed Consent Order requires Duke to divest pipeline systems 
in these markets areas, eliminating any overlap between Duke's current 
holdings and what it will acquire from Phillips and the Conoco/Mitchell 
joint venture. The gas gathering assets to be divested are listed in 
Schedules A-J, with maps depicting the assets listed in Schedules C-J. 
Of the 2,780 miles to be divested under this Consent Order, 2,250 miles 
will be divested to Duke's joint venture partners for these assets. On 
February 28, 2000, Duke divested its interest in the Schedule A assets, 
800 miles of pipe in the Westana area of Oklahoma, to Western, co-owner 
of the Westana Gathering Company. Duke has agreed to divest its 
interest in the Schedule B assets, 1,450 miles of pipe in the Austin 
Chalk area of Texas, to Mitchell, co-owner of Ferguson-Burleson County 
Gas Gathering System. The remaining 530 miles will be sold to 
Commission-approved buyers. The purposes of the divestitures are to 
ensure the continued use of the assets as gas gathering assets and to 
remedy the lessening of competition resulting from the acquisition.
    Duke must divest the assets within 120 days of final acceptance of 
the Consent Order by the Commission. The Consent Order provides that if 
Duke fails to sell the 530 miles of pipe that currently does not have 
an identified buyer, it must offer additional assets for sale (``crown 
jewels''). If Duke fails to divest these assets, or if the sale of 
Mitchell is not completed, by the deadline, the Commission may appoint 
a trustee to sell the assets. Duke has entered into an Asset 
Maintenance Agreement, in which it has agreed to

[[Page 18998]]

maintain the assets that are being divested (as well as the ``crown 
jewel'' assets) in their current condition and provide gas gathering 
services on the same terms and conditions available to customers on 
March 1, 2000, until the 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. 00-8771 Filed 4-7-00; 8:45 am]
BILLING CODE 6750-01-M