9810166
B249703

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

Shell Oil Company, a corporation; and
Tejas Energy, LLC, a limited liability company.

Docket No. C-3843

COMPLAINT

The Federal Trade Commission (“Commission”) having reason to believe that respondents Shell Oil Company (“Shell”) and its subsidiary, Tejas Energy, LLC ("Tejas"), through Tejas’ subsidiary Transok, LLC (“Transok”), are subject to the jurisdiction of the Commission and that Tejas’ acquisition of certain gas-gathering assets of ANR Field Services Company (“ANRFS”) and certain gas processing and other facilities of ANR Production Company (“ANRP”), subsidiaries of The Coastal Corporation (“Coastal”), is in violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal Trade Commission Act (“FTC Act”), as amended, 15 U.S.C. 45, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its Complaint pursuant to Section 11 of the Clayton Act, as amended, 15 U.S.C. 21, and Section 5(b) of the FTC Act, as amended, 15 U.S.C. 45(b), stating its charges as follows:

I. RESPONDENTS

1. Shell is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at One Shell Plaza, Houston, Texas 77002.

2. Respondent Shell is, and at all times relevant herein has been, engaged in commerce as “commerce” is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. 12, and is a corporation whose business is in or affecting commerce as “commerce” is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. 44.

3. Tejas is a limited liability company organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 1301 McKinney, Houston, Texas 77010. Tejas is a wholly-owned subsidiary of Shell.

4. Respondent Tejas is, and at all times relevant herein has been, engaged in commerce as “commerce” is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. 12, and is a corporation whose business is in or affecting commerce as “commerce” is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. 44.

II. THE PROPOSED ACQUISITION

5. Respondents, pursuant to a Letter of Intent dated January 20, 1998, among Transok, ANRFS and ANRP, entered into an agreement to acquire certain ANRFS assets consisting of natural gas pipelines, compressors and related appurtenances, and certain ANRP assets, consisting of a natural gas processing plant and other facilities.

III. THE RELEVANT MARKETS

6. The relevant line of commerce in which to analyze the effects of the acquisition is natural gas gathering services, i.e., the transportation, for oneself or for other persons, of natural gas from the wellhead or producing area to a natural gas transmission pipeline or a natural gas processing plant.

7. The relevant sections of the country in which to analyze the effects of the acquisition are in the areas in and around the following townships in Oklahoma (delineated as Township and Range) and Railroad Blocks in Texas:

a. 13N/26W and 12N/26W in Roger Mills County, Oklahoma; 11N/26W in Roger Mills and Beckham Counties, Oklahoma; and Roberts and Eddleman Block RE, Brooks and Burleson Blocks 1 and 2, and Commissioner of the Land Office State of Oklahoma Block in Wheeler County, Texas;
 
b. 12N/22W and 12N/21W in Beckham and Roger Mills Counties, Oklahoma; and 11N/22W in Beckham County, Oklahoma;
 
c. 12N/19W in Custer County, Oklahoma; and 11N/19W and 10N/19W in Washita County, Oklahoma;
 
d. 11N/15W and 11N/14W in Washita County, Oklahoma;
 
e. 10N/13W, 10N/12W, 9N/12W, 8N/12W and 8N/11W in Caddo County, Oklahoma; and
 
f. 6N/8W in Grady County, Oklahoma; and 6N/9W and 5N/9W in Caddo County, Oklahoma.

8. The relevant line of commerce is highly concentrated in the relevant geographic markets. The acquisition will significantly increase concentration in the relevant geographic markets set forth in Paragraph 7.

9. Respondent Tejas is an actual and potential competitor of Coastal in the relevant line of commerce in the relevant geographic markets.

10. Effective entry in the relevant line of commerce in the relevant geographic markets is unlikely.

IV. EFFECTS OF THE ACQUISITION

11. The effect of the proposed acquisition, if consummated, may be substantially to lessen competition or tend to create a monopoly in the relevant markets in the following ways, among others:

a. actual and potential competition between Tejas and Coastal to provide natural gas gathering services to existing gas wells will be eliminated;
 
b. actual and potential competition between Tejas and Coastal to provide natural gas gathering services for new natural gas wells will be eliminated;
 
c. the likelihood of collusion or coordinated interaction will be increased or facilitated;
 
d. Tejas is likely to exact anticompetitive price increases from producers in the relevant geographic market for performance of natural gas gathering services in the relevant geographic markets; and
 
e. producers may be less likely to do exploratory and developmental drilling for new natural gas in the relevant geographic markets than prior to the merger.

V. VIOLATIONS CHARGED

12. The acquisition agreement described in Paragraph 5 constitutes a violation of Section 5 of the FTC Act, as amended, 15 U.S.C. 45.

13. The acquisition described in Paragraph 5, if consummated, would constitute a violation of Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as amended, 15 U.S.C. 45.

IN WITNESS THEREOF, the Federal Trade Commission, having caused the Complaint to be signed by the Secretary and its official seal affixed, at Washington, D.C., this twenty-first day of December, 1998, issues its Complaint against respondents.

By the Commission.

Benjamin I. Berman
Acting Secretary

SEAL: