NorAm Energy Corp.

For Your Information

The Federal Trade Commission has partially granted and partially denied a petition from NorAm Energy Corp., formerly Arkla, Inc. NorAm had asked the Commission to reopen and vacate an October 1989 consent order which, in part, required the company to divest certain natural gas transportation assets to another entity that would operate them in competition with NorAm.

The Commission has deleted the divestiture requirement, stating that changed market conditions, including regulatory changes and new entry, make it no longer necessary. NorAm remains subject to order provisions requiring the company, for four more years, to obtain FTC approval before acquiring additional natural gas pipeline assets in the Arkoma Basin in Arkansas.

The 1989 order settled charges that Arkla's acquisition of natural gas pipeline assets from TransArk Transmission Co. could reduce competition in the transportation of natural gas out of the Arkoma Basin and the transmission of gas to consumers in the Russellville, Arkansas, area. The FTC had granted approval for Arkla to divest the assets to ANR Pipeline Company, but the divestiture, which also required Federal Energy Regulatory Commission (FERC) approval, was not approved by the FERC. Subse- quently, NorAm petitioned to have the FTC order set aside or modified to delete the divestiture requirements.

The Commission found that new FERC regulations requiring pipelines, among other things, to unbundle their services, changed competitive conditions in the natural gas industry. The changed competitive conditions include substantial new entry by other firms and expanded capacity that have eliminated the need for the divestiture, according to the Commission.

The Commission disagreed with Arkla's argument that there is no longer a need for the prior approval provision, however, citing the continued high level of concentration in the market and other factors. Therefore, the Commission did not set aside the prior approval requirement.
The Commission vote to reopen and modify the order was 4-0, with Commissioner Roscoe B. Starek, III, concurring only in the result.

Copies of the Commission order reopening and modifying the 1989 order, as well as NorAm's petition and the 1989 order itself, are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202-326- 2502

(FTC Docket No. C-3265)