[Federal Register Volume 81, Number 4 (Thursday, January 7, 2016)]
[Notices]
[Pages 778-780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00028]


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FEDERAL TRADE COMMISSION

[File No. 151 0149]


ArcLight Energy Partners Fund VI, L.P.; 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 methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the draft complaint and the terms of the consent 
orders--embodied in the consent agreement--that would settle these 
allegations.

DATES: Comments must be received on or before January 27, 2016.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/arclightgulfoilconsent online or on 
paper, by following the instructions in the Request for Comment part of 
the SUPPLEMENTARY INFORMATION section below. Write ``ArcLight Energy 
Partners Fund VI, L.P., Consent Agreement, File No. 151-0149'' on your 
comment and file your comment online at https://ftcpublic.commentworks.com/ftc/arclightgulfoilconsent by following the 
instructions on the web-based form. If you prefer to file your comment 
on paper, write ``ArcLight Energy Partners Fund VI, L.P., Consent 
Agreement, File No. 151-0149'' on your comment and on the envelope, and 
mail your comment to the following address: Federal Trade Commission, 
Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 
(Annex D), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex 
D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Jennifer Milici (202-326-2912), Bureau 
of Competition, 600 Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing consent orders 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 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 December 28, 2015), on the World Wide Web, 
at http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before January 27, 
2016. Write ``ArcLight Energy Partners Fund VI, L.P., Consent 
Agreement, File No. 151-0149'' on your comment. Your comment--including 
your name and your state--will be placed on the public record of this 
proceeding, including, to the extent practicable, on the public 
Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a 
matter of discretion, the Commission tries to remove individuals' home 
contact information from comments before placing them on the Commission 
Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which . . . is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept 
confidential only if the FTC General Counsel, in his or her sole 
discretion, grants your request in accordance with the law and the 
public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/arclightgulfoilconsent by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``ArcLight Energy Partners 
Fund VI, L.P., Consent Agreement, File No. 151-0149'' on your comment 
and on the envelope, and mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, 
Suite 5610 (Annex D), Washington, DC 20024. If possible, submit your 
paper comment to the Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before January 27, 2016. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Agreement Containing Consent Orders To Aid Public Comment

Introduction

    The Federal Trade Commission (``Commission'') has accepted from 
ArcLight Energy Partners Fund VI, L.P. (``ArcLight''), subject to final 
approval, an Agreement Containing Consent Orders (``Consent 
Agreement'') designed to remedy the anticompetitive effects resulting 
from ArcLight's proposed acquisition of Gulf Oil Limited Partnership 
(``Gulf'') and related assets from Cumberland Farms, Inc.

[[Page 779]]

(``Cumberland''). Under the terms of the proposed Decision and Order 
(``Order'') contained in the Consent Agreement, ArcLight must divest 
four of Gulf's terminals located in Pennsylvania--in Mechanicsburg, 
Altoona, Pittston Township, and Williamsport--to Arc Logistics 
Partners, LP (``Arc Logistics'').
    The Consent Agreement has been placed on the public record for 30 
days to solicit comments from interested persons. Comments received 
during this period will become part of the public record. After 30 
days, the Commission will again review the Consent Agreement and the 
comments received, and will decide whether it should withdraw from the 
Consent Agreement, modify it, or make the Order final.

The Parties

    ArcLight invests in energy infrastructure. Through its wholly-owned 
subsidiary, Pyramid LLC, ArcLight owns and operates twelve light 
petroleum product (``LPP'') terminals in Pennsylvania. ArcLight uses 
its terminals to meet its own marketing needs and offers terminaling 
services to third parties for a fee.
    Cumberland, one of the largest convenience store operators in the 
country, operates a petroleum marketing, terminaling, and distribution 
business through its Gulf subsidiary. Gulf owns and operates twelve LPP 
terminals in the Northeast, including seven in Pennsylvania. Gulf also 
uses its terminals to meet its own marketing needs and provides 
terminaling services to third parties for a fee.

The Proposed Acquisition

    Pursuant to two contingent Purchase and Sale Agreements dated May 
15, 2015, ArcLight proposes to acquire Gulf, and certain other assets, 
from Cumberland (the ``Acquisition''). The Commission's Complaint 
alleges that the Acquisition, if consummated, would violate Section 7 
of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the 
Federal Trade Commission Act, as amended, 15 U.S.C. 45, by 
substantially lessening competition for gasoline and distillate 
terminaling services in relevant geographic markets within 
Pennsylvania.

The Relevant Market

    Terminals are critical to the efficient distribution of LPPs. 
Transporting bulk quantities of LPPs via pipeline or marine vessel is 
significantly less expensive on a per gallon basis than trucking LPPs 
the same distance. Terminals serve as the delivery points on pipeline 
and marine routes and are capable of receiving bulk quantities of LPPs, 
holding LPPs in storage tanks, and loading smaller quantities of LPPs 
onto tanker trucks for local delivery. Tanker trucks pick up product 
from the terminals through specialized loading systems and transport 
LPPs to retail locations and end-use customers. Terminaling services 
include the off-loading, temporary storage, and dispensing of LPPs into 
trucks.
    The Commission's Complaint alleges that the relevant product 
markets within which to analyze the Acquisition are gasoline 
terminaling services and distillates terminaling services. Gasoline 
terminaling service customers can only use terminals that meet 
gasoline-specific environmental regulations. A terminal must have 
specialized equipment, including vapor recovery units and tanks with 
internal floating roofs, to offer gasoline terminaling services. While 
distillate terminaling customers may be able to use gasoline terminals, 
the reverse is not possible due to the more stringent regulatory 
requirements for the storage and handling of gasoline.
    The Commission's Complaint alleges three relevant geographic 
markets in Pennsylvania in which to assess the competitive effects of 
the Acquisition: (1) Altoona, which includes terminals in Altoona; (2) 
Scranton, which includes terminals in Pittston Township and 
Edwardsville; and (3) Harrisburg, which includes terminals in 
Northumberland, Williamsport, Mechanicsburg, and Highspire.
    The Acquisition would substantially increase concentration in 
relevant markets that are already highly concentrated. In the Altoona 
market, ArcLight and Gulf are the only firms that offer gasoline 
terminaling services, and two of three firms that offer distillate 
terminaling services. ArcLight and Gulf are two of only three firms 
that offer gasoline or distillate terminaling services in the Scranton 
market. In the Harrisburg market, ArcLight and Gulf are two of three 
firms that offer gasoline terminaling services, and two of four firms 
that offer distillate terminaling services.

Effects of the Acquisition

    The Acquisition would substantially lessen competition for 
terminaling services in the relevant markets by enabling ArcLight to 
exercise market power unilaterally, and enhancing the likelihood of 
collusion or coordinated interaction among the few remaining 
terminaling services providers. Post-acquisition, ArcLight would be the 
sole firm offering gasoline terminaling services in Altoona. It would 
own most of the LPP storage capacity in each of the other relevant 
markets and would be able to raise terminaling service fees or reduce 
access to terminaling services unilaterally. The remaining firms have 
limited ability to accommodate additional throughput customers and 
would likely be unable to constrain ArcLight from exercising market 
power. To the extent the remaining firms could offer some limited 
constraint on ArcLight's ability to exercise market power unilaterally, 
they are unlikely to do so because the transaction would increase their 
incentives to coordinate tacitly with ArcLight.

Entry Conditions

    Entry into the relevant markets would not be timely, likely, or 
sufficient to deter or counteract the anticompetitive effects arising 
from the Acquisition. Barriers to entry are significant and include 
high sunk costs associated with the construction of a new terminal, and 
the substantial amount of time required to design, build, and permit a 
new facility. ArcLight has significant excess capacity in the relevant 
markets, and this capacity would also discourage new entry.

The Decision and Order

    The Order resolves the competitive concerns raised by the 
Acquisition by requiring that ArcLight divest Gulf's terminals in 
Altoona, Pittston Township, Mechanicsburg, and Williamsport. The Order 
requires ArcLight to divest to Arc Logistics, or another acquirer 
approved by the Commission, the four terminals and all associated 
assets, as well as enter into certain transitional arrangements 
necessary for the acquirer to become established and compete 
successfully in the relevant markets. ArcLight is required to divest 
the terminals within 20 days of closing the Acquisition.
    Arc Logistics is a publicly-traded logistics service provider 
principally engaged in the terminaling, storage, throughput, and 
transloading of crude oil and LPPs. The company owns twelve LPP 
terminals in several states, not including Pennsylvania. To ensure that 
the acquirer has sufficient throughput at the divested terminals while 
it negotiates contracts with new terminal customers, the Order requires 
ArcLight to enter a transitional throughput agreement with Arc 
Logistics, whereby ArcLight commits to throughput certain volumes at 
Arc Logistics' terminals for two years. The Order also requires 
ArcLight to supply Arc Logistics with renewable fuels, at Arc 
Logistics' request, for a period of five years, an option that will 
help Arc Logistics attract throughput customers. Finally, the Order 
requires ArcLight to let any

[[Page 780]]

customer in the relevant markets out of its terminaling service 
contract without penalty for a period of six months after the 
divestiture, allowing Arc Logistics to compete for those customers.
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement, and it is not intended to constitute an official 
interpretation of the Order or to modify its terms in any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-00028 Filed 1-6-16; 8:45 am]
BILLING CODE 6750-01-P