83 FR 55368 - Marathon Petroleum Corp.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

Federal Register Volume 83, Issue 214 (November 5, 2018)

Page Range		55368-55370
FR Document		2018-24078

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 Issue 214 (Monday, November 5, 2018)

[Federal Register Volume 83, Number 214 (Monday, November 5, 2018)]
[Notices]
[Pages 55368-55370]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-24078]

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FEDERAL TRADE COMMISSION

[File No. 181 0152]

Marathon Petroleum Corp.; 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 November 26, 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: ``Marathon Petroleum
Corp.; File No. 1810152'' on your comment, and file your comment online
at https://ftcpublic.commentworks.com/ftc/marathonpetroleumcorpconsent
by following the instructions on the web-based form. If you prefer to
file your comment on paper, write ``Marathon Petroleum Corp.; File No.
1810152'' 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: Helder G. Agostinho (202-326-3415),
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 October 25, 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 November 26,
2018. Write ``Marathon Petroleum Corp.; File No. 1810152'' 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/marathonpetroleumcorpconsent/ 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 ``Marathon
Petroleum Corp.; File No. 1810152'' 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

[[Page 55369]]

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.
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 November 26, 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 Proposed Consent Order 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 Marathon Petroleum
Corporation (``Marathon'') and Express Mart Franchising Corp., Petr-All
Petroleum Consulting Corporation, and REROB, LLC (``Express Mart'' and
collectively, the ``Respondents''). The Consent Agreement is designed
to remedy the anticompetitive effects that likely would result from
Marathon's proposed acquisition of retail fuel outlets and other
interests from Express Mart.
Under the terms of the proposed Consent Agreement, Marathon must
divest to the upfront buyer Sunoco LP (``Sunoco'') retail fuel outlets
and related assets in five local markets in New York. Marathon must
complete the divestiture within 90 days after the closing of Marathon's
acquisition of Express Mart. 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 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 the comments received, and will decide whether it
should withdraw from the Consent Agreement, modify it, or make it
final.

II. The Respondents

Respondent Marathon, a publicly traded company headquartered in
Findlay, Ohio, operates a vertically integrated refining, marketing,
retail, and transportation system. Marathon's wholly owned subsidiary,
Speedway LLC (``Speedway''), owns and operates 2,740 convenience stores
located in 21 states, making it the second-largest chain of company-
owned and -operated gasoline and convenience stores in the United
States. In addition, independent entrepreneurs own and operate 5,600
Marathon-branded retail fuel outlets in 20 states and the District of
Columbia.
Respondent Express Mart is a collection of closely held New York
State S Corporations and limited liability companies headquartered in
Syracuse, New York. Express Mart owns and operates convenience stores
and retail fuel outlets stations primarily along the I-90 corridor in
the Syracuse-Rochester-Buffalo region of upstate New York. Express
Mart's network includes 77 convenience stores with attached fuel
stations, as well as 11 franchise locations owned by independent
contract dealers operating under the Express Mart banner. Express
Mart's convenience stores operate under the Express Mart name, while
its retail fuel stations operate primarily under the Sunoco banner.

III. The Proposed Acquisition

On April 13, 2018, Marathon, through its wholly owned subsidiary
Speedway, entered into an agreement to acquire certain retail fuel
outlets and other interests, from Express Mart (the ``Transaction'').
The Transaction would expand Speedway's presence across upstate New
York.
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 Transaction 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 five local markets in New
York.

IV. The Retail Sales of Gasoline and Diesel

The Commission's Complaint alleges that the relevant product
markets in which to analyze the Transaction are the retail sale of
gasoline and the retail sale of diesel. 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 retail sale of gasoline and the retail sale of diesel
constitute separate relevant markets because the two are not
interchangeable--vehicles that run on gasoline cannot run on diesel and
vehicles that run on diesel cannot run on gasoline.
The Commission's Complaint alleges the relevant geographic markets
in which to assess the competitive effects of the Transaction include
five local markets within the following cities: Farmington,
Fayetteville, Johnson City, Rochester, and Whitney Point in New York.
The geographic markets for retail gasoline and retail diesel are
highly localized, ranging up to a few miles, depending on local
circumstances. Each relevant market is distinct and fact-dependent,
reflecting a number of

[[Page 55370]]

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 may be similar to the
corresponding geographic markets for retail gasoline as many diesel
consumers exhibit the same preferences and behaviors as gasoline
consumers.
The Transaction would substantially increase the market
concentration in each of the five local markets, resulting in five
highly concentrated markets for the retail sale of gasoline and the
retail sale of diesel. In four of the five local gasoline retail
markets, the Transaction would reduce the number of competitively
constraining independent market participants from three to two. In the
fifth local gasoline retail market, the Transaction would reduce the
number of competitively constraining independent participants from four
the three. In three of the five retail diesel markets, the Transaction
would result in a merger to monopoly. In the fourth diesel market, the
Transaction would reduce the number of competitively constraining
independent participants from three to two. In the fifth diesel market,
the Transaction would reduce the number of competitively constraining
independent participants from four to three.
The Transaction would substantially lessen competition for the
retail sale of gasoline and the retail sale of diesel in these local
markets. 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. The combined entity would be able to raise prices
unilaterally in markets where Marathon and Express Mart are close
competitors. Absent the Transaction, Marathon and Express Mart would
continue to compete head to head in these local markets.
Moreover, the Transaction 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 their 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 Marathon to divest certain
Speedway and Express Mart retail fuel outlets and related assets to
Sunoco in five local markets.
The proposed Consent Agreement requires that the divestiture be
completed no later than 90 days after Marathon consummates the
Acquisition. This Agreement protects the Commission's ability to obtain
complete and effective relief given the small number of outlets to be
divested. The proposed Consent Agreement further requires Marathon and
Express Mart to maintain the economic viability, marketability, and
competitiveness of each divestiture asset until the divestiture to
Sunoco is complete. For up to twelve months following the divestiture,
Marathon and Express Mart must make available transitional services, as
needed, to assist the buyer of each divestiture asset.
In addition to requiring outlet divestitures, the proposed Consent
Agreement also requires Respondents to provide the Commission notice
before acquiring designated outlets in the five local areas for ten
years. The prior notice provision is necessary because acquisitions of
the designated outlets likely raise competitive concerns and may fall
below the HSR Act premerger notification thresholds.
Presently, in Rochester, New York, one local market of concern,
Sunoco serves as the wholesale supplier to a retail fuel outlet that is
an independent competitor to Speedway and Express Mart. By purchasing
the Speedway outlet, Sunoco will also become a competitor to the outlet
for which it is currently a wholesale supplier. To address this
concern, Sunoco has agreed to implement a firewall between its
wholesale and retail fuel pricing businesses in that local market. The
firewall will restrict Sunoco retail pricing personnel's access to
wholesale information, prohibiting Sunoco retail from knowing, among
other information, how its pricing decisions affect the competing
location's volumes.
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. During this period, and until such time as the buyer 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 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. 2018-24078 Filed 11-2-18; 8:45 am]
BILLING CODE 6750-01-P

55368 Federal Register / Vol. 83, No. 214 / Monday, November 5, 2018 / Notices

In addition, with respect to the FR this information may also be withheld Commission Act, 15 U.S.C. 46(f), and
Y–12A report, Section 4(k)(7)(A) of the pursuant to exemption 8 of the FOIA, FTC Rule 2.34, 16 CFR 2.34, notice is
BHC Act, (12 U.S.C. 1843(k)(7)(A)), which protects information contained in hereby given that the above-captioned
authorizes the Board and the Treasury ‘‘examination, operating, or condition consent agreement containing a consent
Department to jointly develop reports’’ obtained in the bank order to cease and desist, having been
implementing regulations governing supervisory process (5 U.S.C. 552(b)(8)). filed with and accepted, subject to final
merchant banking activities for Board of Governors of the Federal Reserve approval, by the Commission, has been
purposes of section 4(k)(4)(H) of the System, October 29, 2018. placed on the public record for a period
BHC Act. Section 4(k)(4)(H) of the BHC Michele Taylor Fennell, of thirty (30) days. The following
Act, (12 U.S.C. 1843(k)(4)(H)), and Analysis to Aid Public Comment
Assistant Secretary of the Board.
subpart J of the Board’s Regulation Y, describes the terms of the consent
[FR Doc. 2018–24118 Filed 11–2–18; 8:45 am]
(12 CFR 225.170 et seq.), authorize a agreement, and the allegations in the
BHC that has made an effective FHC BILLING CODE 6210–01–P complaint. An electronic copy of the
election to acquire merchant banking full text of the consent agreement
investments that are not otherwise package can be obtained from the FTC
permissible for an FHC. Section FEDERAL TRADE COMMISSION Home Page (for October 25, 2018), on
10(c)(2)(H) of HOLA, as amended by [File No. 181 0152] the World Wide Web, at https://
Section 606(b) of the Dodd-Frank Act, www.ftc.gov/news-events/commission-
(12 U.S.C. 1467a(c)(2)(H)), and Section Marathon Petroleum Corp.; Analysis actions.
8(a) of the International Bank Act, (12 To Aid Public Comment You can file a comment online or on
U.S.C. 3106(a)), extend certain paper. For the Commission to consider
authorities and requirements of the BHC AGENCY: Federal Trade Commission. your comment, we must receive it on or
Act to SLHCs and to foreign banks, ACTION: Proposed Consent Agreement. before November 26, 2018. Write
respectively. ‘‘Marathon Petroleum Corp.; File No.
The Board does not consider SUMMARY: The consent agreement in this 1810152’’ on your comment. Your
information collected on the FR Y–12 matter settles alleged violations of comment—including your name and
report to be confidential, and the federal law prohibiting unfair methods your state—will be placed on the public
completed version of this report of competition. The attached Analysis to record of this proceeding, including, to
generally is made available to the public Aid Public Comment describes both the the extent practicable, on the public
upon request. However, exemption 4 of allegations in the complaint and the Commission website, at https://
the Freedom of Information Act (FOIA) terms of the consent orders—embodied www.ftc.gov/policy/public-comments.
provides an exemption from public in the consent agreement—that would Postal mail addressed to the
disclosure for ‘‘trade secrets and settle these allegations. Commission is subject to delay due to
commercial or financial information DATES: Comments must be received on heightened security screening. As a
obtained from a person and privileged or before November 26, 2018. result, we encourage you to submit your
or confidential.’’ (5 U.S.C. 552(b)(4)). ADDRESSES: Interested parties may file a comments online. To make sure that the
Thus, if a respondent feels that comment online or on paper, by Commission considers your online
disclosure of confidential commercial or following the instructions in the comment, you must file it at https://
financial information on the FR Y–12 Request for Comment part of the ftcpublic.commentworks.com/ftc/
report is reasonably likely to result in SUPPLEMENTARY INFORMATION section marathonpetroleumcorpconsent/ by
substantial harm to its competitive below. Write: ‘‘Marathon Petroleum following the instructions on the web-
position under exemption 4 of the Corp.; File No. 1810152’’ on your based form. If this Notice appears at
FOIA, the respondent may request comment, and file your comment online http://www.regulations.gov/#!home, you
confidential treatment for such at https://ftcpublic.commentworks.com/ also may file a comment through that
information pursuant to the Board’s ftc/marathonpetroleumcorpconsent by website.
Rules Regarding the Availability of If you prefer to file your comment on
following the instructions on the web-
Information, 12 CFR 261.15. paper, write ‘‘Marathon Petroleum
based form. If you prefer to file your
The Board generally considers the Corp.; File No. 1810152’’ on your
comment on paper, write ‘‘Marathon
information collected on the FR Y–12A comment and on the envelope, and mail
Petroleum Corp.; File No. 1810152’’ on
to be confidential under exemption 4 of your comment to the following address:
your comment and on the envelope, and
the FOIA (5 U.S.C. 552(b)(4)). Federal Trade Commission, Office of the
mail your comment to the following
Information reported on the FR Y–12A Secretary, 600 Pennsylvania Avenue
address: Federal Trade Commission,
is competitively sensitive and its release NW, Suite CC–5610 (Annex D),
Office of the Secretary, 600
would likely result in substantial harm Washington, DC 20580, or deliver your
Pennsylvania Avenue NW, Suite CC–
to the competitive position of an FHC or comment to the following address:
5610 (Annex D), Washington, DC 20580,
SLHC. In addition, if the FR Y–12A data Federal Trade Commission, Office of the
or deliver your comment to the
is obtained as a part of an examination Secretary, Constitution Center, 400 7th
following address: Federal Trade
or supervision of a financial institution, Street SW, 5th Floor, Suite 5610 (Annex
Commission, Office of the Secretary,
D), Washington, DC 20024. If possible,
Constitution Center, 400 7th Street SW,
Dodd-Frank Act, (12 U.S.C. 5365(b)(1)(B)(iv)), submit your paper comment to the
5th Floor, Suite 5610 (Annex D),
certain of the foreign banking organizations that are Commission by courier or overnight
subject to section 165 of the Dodd-Frank Act to Washington, DC 20024.
service.
form U.S. intermediate holding companies. FOR FURTHER INFORMATION CONTACT:
Accordingly, the parent foreign-based organization
Because your comment will be placed
of a U.S. IHC is treated as a BHC for purposes of
Helder G. Agostinho (202–326–3415), on the publicly accessible FTC website
the BHC Act and Section 165 of the Dodd-Frank Bureau of Competition, 600 at https://www.ftc.gov, you are solely
Act. Because Section 5(c) of the BHC Act authorizes Pennsylvania Avenue NW, Washington, responsible for making sure that your
the Board to require reports from subsidiaries of DC 20580.
BHCs, Section 5(c) provides additional authority to
comment does not include any sensitive
require U.S. IHCs to report the information SUPPLEMENTARY INFORMATION: Pursuant or confidential information. In
contained in the FR Y–12 and FR Y–12A reports. to Section 6(f) of the Federal Trade particular, your comment should not

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Document Created: 2018-11-03 00:28:47
Document Modified: 2018-11-03 00:28:47

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Proposed Consent Agreement.
Dates		Comments must be received on or before November 26, 2018.
Contact		Helder G. Agostinho (202-326-3415), Bureau of Competition, 600 Pennsylvania Avenue NW, Washington, DC 20580.
FR Citation		83 FR 55368