83 FR 4051 - Seven & iHoldings Co., Ltd., a Corporation; 7-Eleven, Inc., a Corporation; and Sunoco LP, a Limited Partnership; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

Federal Register Volume 83, Issue 19 (January 29, 2018)

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 orders-- embodied in the consent agreement--that would settle these allegations.

[Federal Register Volume 83, Number 19 (Monday, January 29, 2018)]
[Notices]
[Pages 4051-4053]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-01547]


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FEDERAL TRADE COMMISSION

[File No. 171 0126]


Seven & iHoldings Co., Ltd., a Corporation; 7-Eleven, Inc., a 
Corporation; and Sunoco LP, a Limited Partnership; 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 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 February 20, 2018.

ADDRESSES: Interested parties may file a comment online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write: ``In the Matter of 
Seven & iHoldings Co., Ltd. File No. 1710126'' on your comment, and 
file your comment online at https://ftcpublic.commentworks.com/ftc/sevensunococonsent by following the instructions on the web-based form. 
If you prefer to file your comment on paper, write ``In the Matter of 
Seven & iHoldings Co., Ltd. File No. 1710126'' 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: Eric Olson (202-326-2349), 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 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 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 January 19, 2018), on the World Wide Web, 
at 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 February 20, 
2018. Write ``In the Matter of Seven & iHoldings Co., Ltd. File No. 
1710126'' 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 website, 
at https://www.ftc.gov/policy/public-comments.
    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/sevensunococonsent 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 website.
    If you prefer to file your comment on paper, write ``In the Matter 
of Seven & iHoldings Co., Ltd. File No. 1710126'' 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 FTC 
website at https://www.ftc.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 any 
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 that your comment does not include 
any 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.

[[Page 4052]]

    Visit the FTC website 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 February 20, 2018. 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 Orders (``Consent Agreement'') from Seven & i Holdings Co., 
Ltd. and 7-Eleven, Inc. (collectively, ``7-Eleven''), and Sunoco LP 
(``Sunoco'') (collectively, the ``Respondents''). The Consent Agreement 
is designed to remedy the anticompetitive effects that likely would 
result from 7-Eleven's proposed acquisition of certain Sunoco retail 
fuel assets (the ``Transaction'').
    Absent a remedy, the Transaction would raise competitive concerns 
in 76 local markets in 20 metropolitan statistical areas (``MSAs''). 
Under the terms of the proposed Consent Agreement, 7-Eleven must sell 
retail fuel outlets in some local markets to Sunoco and reject Sunoco 
retail fuel outlets in other local markets pursuant to the Respondents' 
asset purchase agreement (thereby allowing Sunoco to retain these 
assets). The divestitures must be completed no later than 90 days after 
the closing of 7-Eleven's acquisition of Sunoco. The Commission and 
Respondents have agreed to an Order to Maintain Assets that requires 
Respondents to operate and maintain each 7-Eleven divestiture outlet in 
the normal course of business through the date Sunoco acquires the 
outlet.
    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 again review the proposed 
Consent Agreement and any comments received, and will decide whether it 
should withdraw from the Consent Agreement, modify it, or make it 
final.

II. The Respondents

    Respondent Seven & iHoldings Co., Ltd, a publicly traded company 
headquartered in Tokyo, Japan, operates convenience stores and retail 
fuel outlets throughout the United States and the world. 7-Eleven's 
U.S. network consists of approximately 8,500 stores located in 35 
states. More than 1,000 locations are company-operated, making 7-Eleven 
one of the largest convenience store operators in terms of company-
owned stores and the second-largest chain overall in the country. 7-
Eleven convenience store locations operate under the 7-Eleven banner, 
while its retail fuel outlets operate under a variety of company and 
third-party brands.
    Respondent Sunoco operates convenience stores and retail fuel 
outlets in the United States and Canada. With more than 1,300 
convenience stores and retail fuel outlets in the United States, Sunoco 
is one of the largest chains in the country. Sunoco's U.S. convenience 
stores operate primarily under the APlus and Stripes banners, while its 
retail fuel outlets operate under a variety of company and third-party 
brands. Sunoco also has an extensive wholesale fuel business that 
supplies more than 6,800 third-party outlets.

III. The Proposed Acquisition

    On April 6, 2017, 7-Eleven, through its wholly owned subsidiaries 
7-Eleven, Inc. and SEI Fuel Services, Inc. (``SEI Fuel Services''), 
entered into an agreement with Sunoco to acquire approximately 1,100 
retail fuel outlets for approximately $3.3 billion. Sunoco would 
continue to operate its wholesale business and approximately 200 retail 
fuel outlets following the Transaction. SEI Fuel Services would enter 
into a 15-year fuel supply agreement with Sunoco, LLC as a part of the 
Transaction.
    The Commission's Complaint alleges that the Transaction, if 
consummated, would violate Section 7 of the Clayton Act, as amended, 15 
U.S.C. 18, and that the asset purchase 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 and the retail sale of diesel in 76 local markets 
across 20 MSAs.

IV. The Retail Sale of Gasoline and Diesel

    The Commission's Complaint alleges that relevant product markets in 
which to analyze the Transaction are the retail sale of gasoline and 
the retail sale of diesel. The retail sale of gasoline and the retail 
sale of diesel constitute separate relevant markets because the two are 
not interchangeable. Consumers require gasoline for their gasoline-
powered vehicles and can purchase gasoline only at retail fuel outlets. 
Likewise, consumers require diesel for their diesel-powered vehicles 
and can purchase diesel only at retail fuel outlets.
    The Commission's Complaint alleges the relevant geographic markets 
in which to assess the competitive effects of the Transaction are 76 
local markets within the following MSAs: Boston-Cambridge-Quincy, MA-
NH; Brownsville-Harlingen, TX; Buffalo-Niagara Falls, NY; Cape Coral-
Fort Myers, FL; Corpus Christi, TX; Deltona-Daytona Beach-Ormond Beach, 
FL; Killeen-Temple-Fort Hood, TX; Laredo, TX; McAllen-Edinburg-Mission, 
TX; Miami-Fort Lauderdale-Pompano Beach, FL; Gettysburg, PA; Palm Bay-
Melbourne-Titusville, FL; Pittsburgh, PA; Richmond, VA; San Antonio, 
TX; Sarasota-Bradenton-Venice, FL; Tampa-St. Petersburg-Clearwater, FL; 
Rio Grande City-Roma, TX; Victoria, TX; and Washington-Arlington-
Alexandria, DC-VA-MD-WV. Each particular geographic market is unique, 
with factors such as commuting patterns, traffic flows, and outlet 
characteristics playing important roles in determining the scope of the 
geographic market. Retail fuel markets are highly localized and can 
range up to a few miles in size.
    The Transaction would substantially increase the market 
concentration in each of the 76 local markets, resulting in highly 
concentrated markets. In 18 local markets, the Transaction would result 
in a monopoly. In 39 local markets, the Transaction would reduce the 
number of independent market participants from three to two. In 19 
local markets, the Transaction would reduce the number of independent 
market participants from four to three.
    According to the Commission's Complaint, the Transaction would 
reduce the number of independent market participants in each market to 
three or fewer. The Transaction would thereby substantially lessen 
competition in these local markets by increasing the likelihood that 7-
Eleven would unilaterally exercise market power and by increasing the 
likelihood of successful coordination among the remaining firms. Absent 
relief, the Transaction would likely result in higher prices in each of 
the 76 local markets.
    Entry into each relevant market would not be timely, likely, or 
sufficient to deter or counteract the anticompetitive

[[Page 4053]]

effects arising from the Transaction. 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 remedies the Transaction's 
anticompetitive effects by requiring 7-Eleven to sell retail fuel 
outlets in some local markets to Sunoco and reject Sunoco retail fuel 
outlets in other local markets pursuant to the Respondents' asset 
purchase agreement (thereby allowing Sunoco to retain these assets). 
Sunoco intends to convert the acquired or retained stations from 
company-operated sites to commission agent sites. This remedy would 
preserve competition as it is today, ensure that the divestiture assets 
go to a viable, large-scale competitor, and reduce the risks and costs 
associated with asset integration.
    The Commission is satisfied that allowing Sunoco to acquire or 
retain retail fuel stations and transition them to commission agent 
sites is an appropriate remedy. Most importantly, the proposed remedy 
preserves competition in each local market. Indeed, as Sunoco controls 
retail fuel pricing at both its company-operated stations and its 
commission agent stations, Sunoco and 7-Eleven would continue as 
independent retail fuel competitors in each local market. Moreover, 
Sunoco is a large, viable competitor capable of maintaining the 
competitive landscape in each local market. Finally, the proposed 
Consent Agreement reduces the uncertainty and costs relating to 
integration since Sunoco already is familiar with the majority of the 
stations at issue.
    The proposed Consent Agreement also requires that for up to six 
months following the divestiture, with up to an additional twelve 
months at the buyer's option, 7-Eleven make available transitional 
services, as needed, to assist the buyer of each divestiture asset. The 
buyer may extend the period for an additional twelve months, but only 
with Commission approval.
    In addition to requiring outlet divestitures, the proposed Consent 
Agreement also requires 7-Eleven to provide the Commission (and 
Florida, Texas, or Virginia, where applicable) notice before acquiring 
designated outlets in the 76 local areas for ten years. The prior 
notice provision is necessary because acquisitions of the designated 
outlets likely would raise competitive concerns and may fall below the 
HSR 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 the Respondents' complete divestiture of the 
outlet, thereby maintaining the economic viability, marketability, and 
competitiveness of each divestiture asset. During this period, and 
until such time as the buyer (or buyers) no longer requires 
transitional assistance, the Order to Maintain Assets authorizes the 
Commission to appoint an independent third party as a monitor to 
oversee the Respondents' compliance with the requirements of the 
proposed Consent Agreement.
    The proposed Consent Agreement also requires Sunoco to take steps 
to ensure that its employees in charge of setting retail fuel prices at 
the acquired or retained retail fuel outlets do not have access to 
confidential information about Sunoco's post-Transaction wholesale 
supply of 7-Eleven's retail fuel stations. To ensure appropriate 
firewalls remain in place for the duration of the Respondents' fuel 
supply agreement, the proposed Consent Agreement has a term of fifteen 
years.
    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.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2018-01547 Filed 1-26-18; 8:45 am]
 BILLING CODE 6750-01-P