The Federal Trade Commission today took action to restore competition in gasoline and diesel markets in Michigan and Ohio by requiring ARKO Corp. and its subsidiary GPM to roll back anticompetitive provisions of their acquisition of 60 Express Stop retail fuel outlets from Corrigan Oil Company last year. Under the FTC’s order, ARKO and GPM will limit an agreement not to compete that they imposed on Corrigan Oil Company, and Corrigan will be restored as the operator of five retail fuel outlets in five local Michigan markets.
“As part of their $94 million acquisition of Corrigan assets, ARKO and GPM insisted on a sweeping agreement not to compete covering more than 190 GPM locations in Michigan and Ohio, many of which are completely unrelated to the transaction,” said Holly Vedova, Director of the Bureau of Competition. “By keeping Corrigan from competing to sell gasoline and diesel to consumers in these markets, the agreement not to compete harmed customers who otherwise could benefit from this competition.”
Richmond, Va.-based ARKO Corp. and its subsidiary GPM operate or supply fuel and convenience stores in 33 states and Washington D.C. Corrigan is a Michigan-based family-owned business that supplies wholesale and retail fuel to convenience stores.
The complaint alleges that as originally proposed, the agreement not to compete that ARKO and GPM required Corrigan to sign as part of the acquisition harmed customers in local retail gasoline and retail diesel fuel markets throughout Michigan and Ohio. Corrigan was required not to compete not only in the 60 local markets where ARKO and GPM acquired fuel outlets, but also in many other markets. The complaint also alleges that, even in the 60 markets where fuel outlets were acquired, the noncompete agreement was unreasonably overbroad in geographic scope and longer than reasonably necessary to protect a legitimate business interest.
According to the complaint, the acquisition also harmed competition in five local Michigan markets for the retail sale of gasoline and, in one of those markets, for sale of diesel fuel. In each market – including two in Saginaw, and one each in Chesaning, Mt. Morris, and Mason – the acquisition reduced the independent market participants to two or fewer. Because of the acquisition, GPM is likely able to raise prices unilaterally in these markets, the complaint alleges.
The proposed order settling the FTC’s complaint against ARKO and GPM requires them to:
- amend the agreement not to compete to only apply to the retail fuel businesses acquired by GPM, excluding the five locations to be returned to Corrigan.
- limit the terms of the agreement not to compete in these markets to no broader than 3 years in duration and no more than 3 miles from each Express Stop location.
- return to Corrigan, no later than June 28, 2022, the retail fuel outlets in each of the five local markets.
- obtain prior approval from the Commission before acquiring retail fuel assets within a 3-mile driving distance of any of the returned locations for 10 years.
- not enter into or enforce any agreement not to compete related to acquisitions of a retail business that restricts competition solely around a retail fuel business already owned or operated by GPM; and
- notify third parties subject to similar agreements not to compete of GPM’s obligations under the order.
The analysis to aid public comment provides further details.
The FTC appreciates the collaboration of Michigan’s Office of the Attorney General in investigating this case.
The Commission vote to issue the complaint and accept the proposed Consent Order for public comment was 5-0. Chair Lina M. Khan, and Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya issued a statement. The FTC will publish the Consent Agreement package in the Federal Register shortly. Instructions for filing comments appear in the published notice. Comments must be received 30 days after publication in the Federal Register. Once processed, comments will be posted on Regulations.gov.
NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. 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 up to $46,517.