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The Federal Trade Commission announced today that Phillips Petroleum Company and Enron Corp. have agreed to modify a proposed transaction so as to ensure competition for the transportation of natural gas out of the Texas and Oklahoma Panhandle region. The FTC alleged that Phillips' proposed acquisition of certain natural gas pipeline gathering systems owned by Enron subsidiaries would eliminate competition between the two companies in providing natural gas gathering services in the region, resulting in higher prices and reduced gas drilling and production. Phillips and Enron have signed an agreement to settle the FTC charges under which Enron will not sell 830 miles of pipe and related assets within the Panhandle counties to Phillips. The settlement also would require that Phillips and Enron, for 10 years, notify the Commission before engaging in certain transactions involving natural gas gathering in the region.

Phillips is based in Bartlesville, Oklahoma, and Enron is based in Houston, Texas.

The FTC's complaint detailing the allegations states that Phillips and Enron Corp. are the primary providers of natural gas gathering services in many areas of the Texas Panhandle. In the transaction at issue, Phillips, through a subsidiary -- GPM Gas Corporation -- proposed to acquire the stock of two Enron subsidiaries -- Enron Operations Corp. and Transwestern Gathering Company -- with natural gas gathering facilities in the region.

The FTC complaint alleges that the effects of the proposed merger may be to substantially lesson competition or tend to create a monopoly in the relevant market by:

  • eliminating actual or potential competition between Phillips and Enron to provide natural gas gathering services to new and existing natural gas wells in the region;
  • raising prices for producers who need the respondents' services; and
  • deterring exploratory and developmental drilling for new natural gas in the region. 

The proposed consent agreement to settle the charges, announced today for a public comment period, would prohibit Enron from selling 830 miles of pipe and related gas gathering assets within the Panhandle counties to Phillips, as part of the transaction. (The assets are identified in Schedule A in the accompanying proposed consent agreement.)

In addition, the proposed settlement would require, for 10 years, Commission notification before Phillips could acquire more than five miles of gas gathering pipelines located within the Panhandle counties from any one person during any 18 month period; or before Enron could sell any of the assets taken out of the transaction to Phillips or to the Maxus Energy Corporation, another large gas gatherer in the Panhandle region.

Further, Phillips Petroleum and Enron Corp. have agreed to take no steps to consummate the proposed acquisition until the Commission determines, after the public comment period, whether to accept the proposed order.

The Commission vote to accept the proposed consent agreeement for public comment was 5-0. The proposed consent agreement will be published in the Federal Register shortly and will be subject to public comment for 60 days. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $10,000.

Copies of the complaint, the proposed consent agreement and an analysis of the agreement to aid in public comment, 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. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov

Press Release Reference

Federal Trade Commission has given Final Approval to a Consent Agreement with Phillips Petroleum Company and Enron Corp.
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