Feb. 4, 2000
FTC Decision to Block BP Amoco-Arco Merger
is Major Victory for Consumers
Statement of Wenonah Hauter, Director,
Public Citizen s Critical Mass Energy Project
Over the past many months, Public Citizen has worked hard to educate policymakers, citizens and the media about the growing danger of consolidation in the oil industry.?We are heartened that at least regarding this merger, the Federal Trade Commission (FTC) has lived up to its responsibility to fight for fair competition and the protection of consumers. The decision this week to block the purchase of the Atlantic Richfield Co. (Arco) by the oil giant BP Amoco is a much needed and overdue step to stem the tide of monopolistic mergers. These mergers bring higher prices for consumers, decreased competition in the marketplace and disproportionate political influence for the resulting mega-companies.
The merger of BP Amoco and Arco would have created a company with the second largest share of retail gasoline sales in the U.S. The merger would have affected retail prices of gasoline for the entire West Coast, a region that is highly dependent on Alaskan oil. It would have created a dangerous situation where one company owned as much as 72 percent of the 800-mile Trans-Alaska pipeline.
Even with the agreement that the companies made with Alaska to reduce production to 55 percent, the company would have been a majority owner of most of Alaska s developed oil fields and facilities. The divestiture that the companies proposed to gain acceptance of their merger would clearly have been inadequate to prevent them from stifling competition and raising prices for consumers on the West Coast.
In addition, it is likely that the new company would had continued the practices of BP Amoco and Arco of funneling millions of dollars to politicians, who have historically rewarded large oil company donors with legislation that thwarts environmental laws, threatening the safety of our families, communities and natural resources. During the 1997-98 election cycle, BP Amoco spent $8.9 million and Arco spent $8.5 million on lobbying, and together they spent $1.5 million in campaign contributions. Allowing these companies to increase their political clout through a merger was not in the best interest of our democracy.
The FTC s decision to block the merger sets new boundaries for the increasing consolidation of corporations. It is good public policy to recognize the lessons learned in the early part of the 20th century about the dangers to consumers when excessive power is concentrated in the hands of a few super multinational oil companies. Public Citizen urges the FTC to continue to exercise this kind of vigilance in the future.