[Federal Register Volume 85, Number 169 (Monday, August 31, 2020)]
[Notices]
[Pages 53814-53817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-19140]


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FEDERAL TRADE COMMISSION

[File No. 201-0041]


Arko Holdings Ltd. and Empire Petroleum Partners, LLC; Analysis 
of Consent Orders To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

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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 complaint 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 September 30, 2020.

ADDRESSES: Interested parties may file comments online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write: ``Arko Holdings 
Ltd. and Empire Petroleum Partners, LLC; File No. 201 0041'' on your 
comment, and file your comment online at https://www.regulations.gov by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, please 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

[[Page 53815]]

Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Steven Couper (202-326-3349), Bureau 
of Competition, Federal Trade Commission, 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 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 thirty (30) days. The 
following Analysis of Agreement Containing Consent Orders 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 website (for 
August 25, 2020), at this web address: https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before September 30, 
2020. Write ``Arko Holdings Ltd. and Empire Petroleum Partners, LLC; 
File No. 201 0041'' 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 https://www.regulations.gov website.
    Due to the public health emergency in response to the COVID-19 
outbreak and the agency's heightened security screening, postal mail 
addressed to the Commission will be subject to delay. We strongly 
encourage you to submit your comments online through the https://www.regulations.gov website.
    If you prefer to file your comment on paper, write ``Arko Holdings 
Ltd. and Empire Petroleum Partners, LLC; File No. 201 0041'' 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.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure that your comment does not include any sensitive or 
confidential information. In particular, your comment should not 
include sensitive personal information, such as your or anyone else'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 your comment does not 
include sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
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)--including in particular competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). 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). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on the public FTC website--as legally required by FTC Rule 
4.9(b)--we cannot redact or remove your comment from the FTC website, 
unless you submit a confidentiality request that meets the requirements 
for such treatment under FTC Rule 4.9(c), and the General Counsel 
grants that request.
    Visit the FTC website at http://www.ftc.gov to read this Notice and 
the news release describing this matter. 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 September 30, 2020. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Consent Orders To Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted for 
public comment, subject to final approval, an Agreement Containing 
Consent Orders (``Consent Agreement'') from Arko Holdings Ltd. 
(``Arko''), GPM Southeast, LLC, and GPM Petroleum, LLC (collectively 
with Arko, ``GPM'') and Empire Petroleum Partners, LLC (``Empire,'' and 
collectively ``Respondents''). The Consent Agreement is designed to 
remedy the anticompetitive effects that likely would result from GPM's 
proposed acquisition of retail fuel assets from Empire.
    Under the terms of the proposed Consent Agreement, Respondents must 
divest certain retail fuel assets in seven local markets in Indiana, 
Michigan, Maryland, and Texas. Respondents must complete the 
divestiture within 20 days after the closing of the acquisition. The 
Commission and Respondents have agreed to an Order to Maintain Assets 
that requires Respondents to operate and maintain each divestiture 
outlet in the normal course of business through the date the up-front 
buyers acquire the divested assets.
    The Commission has placed the proposed Consent Agreement 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 review the proposed Consent 
Agreement and the comments received, and will decide whether it should 
withdraw from the Consent Agreement, modify it, or make it final.

II. The Respondents

    Respondent Arko is a publicly traded company headquartered in Tel 
Aviv, Israel. Arko, through its subsidiaries GPM Southeast, LLC, and 
GPM Petroleum, LLC, supplies wholesale fuel to or operates 
approximately 1,400 retail fuel and convenience stores in twenty-two 
states across the South, Mid-Atlantic, and Midwest. In 2019, GPM ranked 
as the sixth largest operator of retail fuel and convenience stores in 
the United States.
    Respondent Empire is a privately held Delaware limited liability 
company headquartered in Dallas, Texas. Empire also distributes fuel on 
a wholesale basis and operates retail fuel and convenience stores in 30 
states and Washington, DC With respect to

[[Page 53816]]

wholesale fuel distribution, Empire is a ``super jobber,'' a company 
that supplies over one billion gallons of fuel each year. Empire has 
supply relationships with all major oil companies, and distributes both 
branded and unbranded fuel. Empire supplies fuel to 1,555 retail sites, 
and operates 76 retail fuel and convenience stores itself.

III. The Proposed Acquisition

    On December 17, 2019, GPM entered into an agreement to acquire 
certain retail and wholesale fuel assets from Empire and related 
entities (the ``Acquisition''). With the Complaint, the Commission 
alleges that the Acquisition, if consummated, would violate Section 7 
of the Clayton Act, as amended, 15 U.S.C. 18, and that the Acquisition 
agreement constitutes a violation of Section 5 of the Federal Trade 
Commission Act, as amended, 15 U.S.C. 45, by substantially lessening 
competition for the retail sale of gasoline in seven local markets in 
Indiana, Michigan, Maryland, and Texas, and by substantially lessening 
competition for the retail sale of diesel fuel in three local markets 
in Indiana, Michigan, and Texas.

IV. The Retail Sale of Gasoline and Diesel Fuel

    The Commission alleges that the relevant product markets in which 
to analyze the Acquisition are the retail sale of gasoline and the 
retail sale of diesel fuel. Consumers require gasoline for their 
gasoline-powered vehicles and can purchase gasoline only at retail fuel 
outlets. Likewise, consumers require diesel fuel for their diesel-
powered vehicles and can purchase diesel fuel only at retail fuel 
outlets. The retail sale of gasoline and the retail sale of diesel fuel 
constitute separate relevant markets because the two are not 
interchangeable. Vehicles that run on gasoline cannot run on diesel 
fuel, and vehicles that run on diesel fuel cannot run on gasoline.
    The Commission alleges that the relevant geographic markets in 
which to assess the competitive effects of the Acquisition with respect 
to the retail sale of gasoline are seven local markets in and around 
the following cities: Knox, Indiana; Kokomo, Indiana; South Bend, 
Indiana; Stevensville, Maryland; Edmore, Michigan; Hastings, Michigan; 
and Arlington, Texas. The relevant geographic markets in which to 
assess the competitive effects of the Acquisition with respect to the 
retail sale of diesel fuel are three local markets in and around the 
following cities: South Bend, Indiana; Edmore, Michigan; and Arlington, 
Texas.
    The geographic markets for retail gasoline and retail diesel fuel 
are highly localized, depending on the unique circumstances of each 
area. Each relevant market is distinct and fact-dependent, reflecting 
many considerations, including commuting patterns, traffic flows, and 
outlet characteristics. Consumers typically choose between nearby 
retail fuel outlets with similar characteristics along their planned 
routes. The geographic markets for the retail sale of diesel fuel are 
similar to the corresponding geographic markets for retail gasoline, as 
many diesel fuel consumers exhibit preferences and behaviors similar to 
those of gasoline consumers.
    The Acquisition would substantially lessen competition in each of 
these local markets, resulting in seven highly concentrated markets for 
the retail sale of gasoline and three highly concentrated markets for 
the retail sale of diesel fuel. Retail fuel outlets compete on price, 
store format, product offerings, and location, and pay close attention 
to competitors in close proximity, on similar traffic flows, and with 
similar store characteristics. In each of the local gasoline and diesel 
fuel retail markets, the Acquisition would reduce the number of 
competitively constraining independent market participants to three or 
fewer. The combined entity would be able to raise prices unilaterally 
in markets where GPM and Empire are close competitors. Absent the 
Acquisition, GPM and Empire would continue to compete head to head in 
these local markets.
    Moreover, the Acquisition would enhance the incentives for 
interdependent behavior in local markets where only two or three 
competitively constraining independent market participants would 
remain. Two aspects of the retail fuel industry make it vulnerable to 
such coordination. First, retail fuel outlets post their fuel prices on 
price signs that are visible from the street, allowing competitors to 
observe each other's fuel prices without difficulty. Second, retail 
fuel outlets regularly track their competitors' fuel prices and change 
their own prices in response. These repeated interactions give retail 
fuel outlets familiarity with how their competitors price and how 
changing prices affect fuel sales.
    Entry into each relevant market would not be timely, likely, or 
sufficient to deter or counteract the anticompetitive effects arising 
from the Acquisition. Significant entry barriers include the 
availability of attractive real estate, the time and cost associated 
with constructing a new retail fuel outlet, and the time associated 
with obtaining necessary permits and approvals.

V. The Proposed Consent Agreement

    The proposed Consent Agreement would remedy the Acquisition's 
likely anticompetitive effects by requiring Respondents to divest 
certain retail fuel assets to an independent competitor in each local 
market. Each buyer of divestiture assets is an experienced operator or 
supplier of retail fuel sites, and will be a new entrant into the local 
market.
    The proposed Consent Agreement requires that the divestiture be 
completed no later than 20 days after Respondents consummate the 
Acquisition. The proposed Consent Agreement further requires 
Respondents to maintain the economic viability, marketability, and 
competitiveness of each divestiture asset until the divestiture is 
complete. For up to 15 months following the divestiture, Respondents 
must provide transitional services, as needed, to assist the buyers 
with the divestiture assets.
    In addition to requiring outlet divestitures, the proposed Consent 
Agreement requires Respondents to provide the Commission notice before 
acquiring retail fuel assets within a fixed distance of any GPM outlet 
in a market involving a divestiture for ten years. The prior notice 
provision is necessary because an acquisition in close proximity to 
divested assets likely would raise the same competitive concerns as the 
Acquisition, and may fall below the Hart-Scott-Rodino Act premerger 
notification thresholds.
    The proposed Consent Agreement contains additional provisions 
designed to ensure the effectiveness of the proposed relief. For 
example, Respondents have agreed to an Order to Maintain Assets that 
will issue at the time the proposed Consent Agreement is accepted for 
public comment. The Order to Maintain Assets requires Respondents to 
operate and maintain each divestiture outlet in the normal course of 
business, through the date Respondents complete the divestiture. The 
Commission may appoint an independent third party as a Monitor to 
oversee Respondents' compliance with the requirements of the proposed 
Consent Agreement.
    The purpose of this analysis is to facilitate public comment on the 
proposed Consent Agreement, and the Commission does not intend this 
analysis to constitute an official interpretation of the proposed 
Consent Agreement or to modify its terms in any way.


[[Page 53817]]


    By direction of the Commission, Commissioner Slaughter and 
Commissioner Wilson not participating.
April J. Tabor,
Acting Secretary.
[FR Doc. 2020-19140 Filed 8-28-20; 8:45 am]
BILLING CODE 6750-01-P