FTC Takes Action to Prevent Anticompetitive Effects of Retail Gas Station Deal

Today, the Federal Trade Commission took action to protect Americans from paying higher prices at the pump by resolving antitrust concerns surrounding Alimentation Couche-Tard Inc.’s (ACT) proposed $1.57 billion acquisition of 270 retail fuel outlets from grocery store chain Giant Eagle, Inc.

ACT currently operates more than 7,100 stores in the United States, primarily under the brand Circle K. Under the proposed consent order, the FTC will require ACT to divest 35 gas stations, which will be acquired by Majors Management, LLC. The consent order settles FTC charges that ACT’s deal with Giant Eagle is anticompetitive and will likely lead to higher fuel costs for consumers across Indiana, Ohio, and Pennsylvania.

“This anticompetitive acquisition threatened to make Americans pay more at the pump by raising fuel prices,” said Daniel Guarnera, Director of the FTC’s Bureau of Competition. “The FTC’s action today preserves competition between gas stations that is critical for keeping fuel prices in check. The FTC will keep a watchful eye on retail fuel markets to make sure American consumers can spend less on gas and keep more money in their pockets.”

As originally structured, ACT’s acquisition of Giant Eagle’s retail fuel outlets would eliminate head-to-head competition across 35 local markets in Indiana, Ohio, and Pennsylvania, the FTC’s complaint alleges. In these 35 local markets, ACT and Giant Eagle routinely monitor each other’s prices and currently use that information when setting their own prices for gasoline and diesel fuel. In addition, ACT and Giant Eagle stations are frequently located along the same traffic routes and are geographically close to each other, making them a clear, and sometimes the only, alternative for consumers.

The complaint alleges that ACT would be able to raise fuel prices unilaterally after the proposed acquisition by eliminating current competition from Giant Eagle. Further, the acquisition threatens to lead to coordinated interaction between the remaining retail fuel outlets, since the merger would reduce the number of independent competitors in each local market.

Majors, which will acquire the 35 divested gas stations, is an experienced operator of retail fuel outlets. This transaction will expand its geographic footprint as a new competitor in markets across Indiana, Ohio, and Pennsylvania, ultimately resolving the FTC’s antitrust concerns.

The FTC’s proposed order requires the store divestitures and specifies, among other terms, that:

• The divestiture of the retail fuel outlets must be completed no later than 20 days after ACT consummates the acquisition;
• ACT must maintain the economic viability, marketability, and competitiveness of each divested station until the divestiture to Majors is complete;
• ACT must not re-acquire any divested station for a period of 10 years; and
• ACT must provide advance notice to the Commission before acquiring any stations designated by the Commission as competitively significant in the local markets of the divested stations for 10 years.

The Commission vote to issue the complaint and accept the consent agreement for public comment was 3-0. Commissioner Mark R. Meador issued a statement.

The public will have 30 days to submit comments on the proposed consent agreement package. Instructions for filing comments appear on the docket. Once processed, they 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.