[Federal Register Volume 87, Number 111 (Thursday, June 9, 2022)]
[Notices]
[Pages 35212-35214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-12430]
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FEDERAL TRADE COMMISSION
[File No. 211 0144]
Buckeye/Magellan; Analysis of Agreement Containing 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 of Proposed Consent Orders to Aid Public Comment
describes both the allegations in the 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 July 11, 2022.
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: ``Buckeye/
Magellan; File No. 211 0144'' 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.
FOR FURTHER INFORMATION CONTACT: Terry Thomas (202-326-3218), Bureau of
Competition, Federal Trade Commission, 400 7th Street SW, Washington,
DC 20024.
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 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 July 11, 2022.
Write ``Buckeye/Magellan; File No. 211 0144'' 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 protective actions in response to the COVID-19 pandemic and
the agency's heightened security screening, postal mail addressed to
the Commission will be delayed. 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 ``Buckeye/
Magellan; File No. 211 0144'' 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.
Because your comment will be placed on the publicly accessible
website at https://www.regulations.gov, you are solely responsible for
making sure 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 competitively sensitive
[[Page 35213]]
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 https://www.regulations.gov--as legally required by FTC
Rule 4.9(b)--we cannot redact or remove your comment from that 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 https://www.ftc.gov to read this document
and the news release describing this matter. The FTC Act and other laws
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 it receives on
or before July 11, 2022. 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 Agreement Containing 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 Order (``Consent Agreement'') from IFM Global Infrastructure
Fund, Buckeye Partners, L.P. (``Buckeye'') and Magellan Midstream
Partners, L.P. (``Magellan'') (collectively, the ``Respondents''). The
Consent Agreement is designed to remedy the anticompetitive effects
that likely would result from Buckeye's proposed acquisition from
Magellan of 26 light petroleum product (``LPP'') terminals, located
primarily in the southeastern United States.
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
terminaling services for all LPPs, and terminaling services
specifically for gasoline, in three relevant geographic markets: North
Augusta, South Carolina; Spartanburg, South Carolina; and Montgomery,
Alabama.
Petroleum product terminals are critical to the efficient
distribution of LPPs. Terminals generally consist of storage tanks that
load fuel into tanker trucks for further delivery. Terminals receive
their supply from pipelines or water vessels. Wholesale petroleum
suppliers move LPPs from the terminals to retail locations and end-use
customers. Terminaling services include the cluster of services related
to the off-loading, temporary storage, and dispensing of LPPs into
trucks.
Under the terms of the proposed Decision and Order (``Order'')
included in the Consent Agreement, Buckeye must divest all of
Magellan's terminals located in North Augusta, South Carolina;
Spartanburg, South Carolina; and Montgomery, Alabama, to U.S. Venture,
Inc. (``U.S. Venture''), a financially sound buyer with a record of
operating successful LPP terminals in other locations. The divestitures
will effectively restore an independent terminal operator in each
relevant geographic market and will thereby preserve competition in
each relevant market. Further, the Commission has issued, and
Respondents have agreed to comply with, an Order to Maintain Assets
that requires Respondents to operate and maintain the divestiture
assets in the normal course of business through the date U.S. Venture
acquires the divested assets.
The Commission has placed the 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 comments received
and decide whether it should withdraw, modify, or make the proposed
Order final.
II. The Respondents
Buckeye provides midstream logistics solutions, primarily
consisting of pipeline transportation, storage, and throughput of LPPs,
which include gasoline and distillates. Buckeye is headquartered in
Houston, Texas. Buckeye owns over 115 LLP terminals which are located
primarily in the Northeast and Midwest. IFM Global Infrastructure Fund
is the ultimate parent entity of Buckeye.
Magellan is a publicly traded partnership that transports, stores,
processes, and distributes LLPs and crude oil. Magellan operates a
pipeline system and terminals in the central United States as well as
terminals in the southeastern United States. Magellan is headquartered
in Tulsa, Oklahoma. In 2020, Magellan's revenues from transportation
and terminals were $1.8 billion.
III. The Proposed Acquisition
Pursuant to an Equity Purchase Agreement dated June 9, 2021,
Buckeye will acquire 26 LLP terminals from Magellan for approximately
$435 million (the ``Acquisition''). The terminals are located in
Alabama, Georgia, Missouri, North Carolina, South Carolina, Tennessee,
and Virginia.
IV. The Relevant Markets
The Commission's Complaint alleges that the relevant service
markets in which to analyze the Acquisition is terminaling services for
LPPs and terminaling services for gasoline specifically. Refiners,
independent traders, and fuel marketers require a means to receive and
store bulk quantities of LLPs and to deliver these products into tanker
trucks, whether for their own use or for their customers. No cost-
effective alternatives to terminaling services serve these functions.
To provide terminaling services for gasoline, terminals generally must
have specialized equipment, including vapor recovery units, tanks with
internal floating roofs, and the ability to blend gasoline with
ethanol. While gasoline-capable storage tanks may also handle
distillates, the reverse is generally not possible without added
expense, due to the more stringent regulatory requirements for the
storage and handling of gasoline. Because storing and handling gasoline
requires different tanks and other infrastructure, a narrower
terminaling market also exists for terminaling services specifically
for gasoline.
The Commission's Complaint alleges three relevant geographic
markets: North Augusta, South Carolina; Spartanburg, South Carolina;
and Montgomery, Alabama. The area that a particular terminal can serve
is limited by several factors, including the density of retail outlets
served from the terminal, trucking costs relating to labor and fuel,
driving times and distances, loading and waiting times at the terminal,
and the relative price differences of LPPs offered at alternative
terminals.
[[Page 35214]]
The Acquisition would likely substantially lessen competition in
each local market. In North Augusta, Buckeye and Magellan are two of
only three firms that offer terminaling services for LPPs and for
gasoline. The markets are highly concentrated with the significant
increase in concentration giving rise to a presumption of enhanced
market power post-Acquisition. In Spartanburg, as measured by LPP
capacity, Buckeye owns the largest terminal and Magellan owns the
second largest. The Acquisition would result in highly concentrated
markets for LPP and gasoline terminaling services with a change in
concentration giving rise to a presumption of enhanced market power. In
Montgomery, the Acquisition would reduce the number of terminal service
operators from six to five, resulting in a moderately concentrated
market post-Acquisition, and would also reduce the number of gasoline
terminal operators from five to four, resulting in a highly
concentrated market post-Acquisition. Moreover, Buckeye and Magellan
are two of few independent gasoline terminal operators in Montgomery,
who have little or no refining or marketing activities that can be
supported by their terminal operations. The Acquisition would leave as
few as two independent gasoline terminal operators in Montgomery and
limit options for third parties to access independent terminaling
services providers in that market.
Entry into each relevant market 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 time required to design, build, and permit a new facility.
V. The Proposed Order and the Order To Maintain Assets
The proposed Order and the Order to Maintain Assets would remedy
the Acquisition's likely anticompetitive effects alleged in the
Commission's Complaint by requiring Buckeye to divest the Magellan
terminals and all associated assets (the ``Terminal Divestiture
Assets'') in North Augusta, Spartanburg, and Montgomery to U.S.
Venture. The proposed Order ensures that U.S. Venture or any other
acquirer can operate the terminals in a manner equivalent in all
material respects to the manner in which Magellan operated those
businesses prior to the Acquisition.
U.S. Venture is a privately held company that was founded in 1951
and currently has a number of divisions, including U.S. Oil. U.S. Oil
will be responsible for operating the divested terminals. U.S. Oil owns
and operates 26 terminals in Iowa, Michigan, Indiana, Wisconsin, and
Texas serving retail customers at 11 locations. U.S. Oil does not have
any refined products terminals in the southeastern United States.
The proposed Order requires Buckeye to divest the Terminal
Divestiture Assets no later than 10 days after Buckeye and Magellan
consummate the Acquisition.
The proposed Order and the Order to Maintain Assets contain
additional provisions designed to ensure the effectiveness of the
relief. Both the proposed Order and the Order to Maintain Assets
require Respondents to maintain the Terminal Divestiture Assets' full
economic viability, marketability, and competitiveness until the
divestitures are completed and to help facilitate the transfer of the
Terminal Divestiture Assets to U.S. Venture.
In addition to requiring divestiture of the Terminal Divestiture
Assets, the proposed Order requires Buckeye to seek prior approval from
the Commission before acquiring any LPP terminal (including the
divested terminals) within a 60-mile radius of the Terminal Divestiture
Assets 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 Order further requires U.S. Venture to obtain
prior approval from the Commission for a period of three years before
transferring any of the divested assets to any buyer, and for a period
of seven additional years to any buyer with an interest in any LLP
terminal in any of the three relevant geographic markets.
Finally, the proposed Order appoints The Claro Group as an
independent third-party monitor to oversee the Respondents' compliance
with the requirements of the proposed Order. The Claro Group has
previous experience serving as a monitor for the Commission in matters
relating to natural gas pipelines and retail gasoline outlets.
The purpose of this analysis is to facilitate public comment on the
proposed Order, and the Commission does not intend this analysis to
constitute an official interpretation of the proposed Order or to
modify its terms in any way.
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022-12430 Filed 6-8-22; 8:45 am]
BILLING CODE 6750-01-P