UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of

Dominion Resources, Inc., a corporation, and
Consolidated Natural Gas Company, a corporation.

Docket No. C-3901

COMPLAINT

The Federal Trade Commission ("Commission"), having reason to believe that Respondent, Dominion Resources, Inc. ("Dominion"), a corporation subject to the jurisdiction of the Commission, has agreed to acquire all the voting stock of Respondent, Consolidated Natural Gas Company ("CNG"), a corporation subject to the jurisdiction of the Commission, 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, 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, stating its charges as follows:

I. DEFINITIONS

1. "Generation of electric power" means the process by which electricity is generated through the use of fuel such as natural gas.

2. "Virginia Natural Gas" or "VNG" means Virginia Natural Gas, Inc., the subsidiary of CNG that provides local gas distribution service within the Commonwealth of Virginia.

3. "Merger Agreement" means the Agreement and Plan of Merger between Dominion and CNG, dated March 31, 1999, and amended May 11, 1999.

4. "Respondents" means Dominion and CNG, individually and collectively.

II. RESPONDENTS

5. Respondent Dominion is a corporation organized, existing and doing business under and by virtue of the laws of Virginia, with its office and principal place of business located at 120 Tredegar Street, Richmond, Virginia 23219. Respondent Dominion, among other things, is engaged in the generation of electric power.

6. Respondent CNG is a corporation organized, existing, and doing business under and by virtue of the laws of Delaware, with its principal place of business located at 625 Liberty Avenue, CNG Tower, Pittsburgh, Pennsylvania 15222. Respondent CNG, among other things, is engaged in the transportation of natural gas used in the generation of electric power.

7. Pursuant to the Merger Agreement, Dominion will acquire 100 percent of the outstanding voting securities of CNG.

8. Respondents are, and at all times relevant herein have been, engaged in commerce, as "commerce" is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. 12, and are corporations whose businesses are in or affect commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. 44.

III. THE ACQUISITION

9. On March 31, 1999, Respondents entered into an Agreement and Plan of Merger which was amended on May 11, 1999, under which Dominion is to acquire 100 percent of the voting securities of CNG valued at approximately $5.3 billion ("Acquisition").

IV. THE RELEVANT MARKETS

10. For the purposes of this Complaint, the relevant lines of commerce in which to analyze the effects of the Acquisition are the generation of electric power and the distribution of natural gas.

11. For the purposes of this Complaint, the southeastern area of Virginia is the relevant geographic area in which to analyze the effects of the Acquisition in the relevant lines of commerce.

V. THE STRUCTURE OF THE MARKETS

12. The markets for the generation of electrical power and the distribution of natural gas in southeastern Virginia are highly concentrated. Dominion, through its subsidiary, Virginia Power, accounts for more than 70 percent of the electric power generation capacity in the Commonwealth of Virginia. CNG, through its subsidiary, VNG, is the primary distributor of natural gas in southeastern Virginia. Natural gas is one of a limited number of fuels used in the generation of electricity. The proposed acquisition would provide Dominion with control of the available source of firm natural gas transportation capacity in the VNG service territory, thereby enhancing its control over the generation of electrical power in that area.

VI. BARRIERS TO ENTRY

13. The market for the generation of electrical power in the relevant area is characterized by high barriers to entry. Entry into the electrical power generation market in the relevant geographic area by construction of plants that use fuels other than natural gas is unlikely to occur due to environmental restrictions. With the acquisition of CNG by Dominion, entry into the electrical power generation market in the relevant geographic area by construction of plants that use natural gas may be deterred because of Dominion's control over VNG, the primary distributor of natural gas in southeastern Virginia. Dominion's control over VNG would likely deter or disadvantage entry by independent electrical power generation companies because Dominion may be able to raise the costs of entry and/or production to new entrants.

14. Entry into the market for the transportation and distribution of natural gas in the relevant geographic area is unlikely to occur in a timely manner to deter or counteract the adverse competitive effects described in Paragraph 15. Construction of natural gas pipelines to serve the southeastern Virginia area would be costly and time consuming, and is not likely to occur due to the existence of substantial excess capacity on the VNG pipeline.

VII. EFFECTS OF THE ACQUISITION

15. The effects of the Acquisition, if consummated, may be substantially to lessen competition and to tend to create a monopoly in the electric power generation market in the relevant area in 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 the following ways, among others:

a. by increasing barriers to entry by independent producers; and

b. by increasing the likelihood that customers will be forced to pay higher prices.

VIII. VIOLATIONS CHARGED

16. The Acquisition agreement described in Paragraph 9 constitutes a violation of Section 5 of the FTC Act, as amended, 15 U.S.C. 45.

17. The Acquisition described in Paragraph 9, 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.

WHEREFORE, THE PREMISES CONSIDERED, the Federal Trade Commission on this fourth day of November, 1999, issues its Complaint against said Respondents.

By the Commission.

Donald S. Clark
Secretary

SEAL: