Notice2021-15350
Seven & i Holdings Co., Ltd.; Analysis of Agreement Containing Consent Orders To Aid Public Comment
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
July 20, 2021
Issuing agencies
Federal Trade Commission
Abstract
The consent agreement in this matter settles alleged violations of federal law prohibiting unfair methods of competition. The attached Analysis of Proposed Consent Orders to Aid Public Comment describes both the allegations in the complaint and the terms of the consent orders--embodied in the consent agreement--that would settle these allegations.
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<title>Federal Register, Volume 86 Issue 136 (Tuesday, July 20, 2021)</title>
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[Federal Register Volume 86, Number 136 (Tuesday, July 20, 2021)]
[Notices]
[Pages 38343-38348]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-15350]
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FEDERAL TRADE COMMISSION
[File No. 201 0108]
Seven & i Holdings Co., Ltd.; Analysis of Agreement Containing
Consent Orders To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair methods of competition.
The attached Analysis of Proposed Consent Orders to Aid Public Comment
describes both the allegations in the complaint and the terms of the
consent orders--embodied in the consent agreement--that would settle
these allegations.
DATES: Comments must be received on or before August 19, 2021.
ADDRESSES: Interested parties may file comments online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write: ``Seven & i
Holdings Co., Ltd.; File No. 201 0108'' on your comment, and file your
comment online at <a href="http://www.regulations.gov">www.regulations.gov</a> by following the instructions on
the web-based form. If you prefer to file your comment on paper, please
mail your comment to the following address: Federal Trade Commission,
Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610
(Annex D), Washington, DC 20580; or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT: Nicholas Bush (202-326-2848), Bureau
of Competition, Federal Trade Commission, 600 Pennsylvania Avenue NW,
Washington, DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis of Agreement Containing Consent Orders to Aid Public
Comment describes the terms of the consent agreement and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC
[[Page 38344]]
website at this web address: <a href="https://www.ftc.gov/news-events/commission-actions">https://www.ftc.gov/news-events/commission-actions</a>.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before August 19, 2021.
Write ``Seven & i Holdings, Ltd.; File No. 201 0108'' on your comment.
Your comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the <a href="http://www.regulations.gov">www.regulations.gov</a> website.
Due to protective actions in response to the COVID-19 pandemic and
the agency's heightened security screening, postal mail addressed to
the Commission will be subject to delay. We strongly encourage you to
submit your comments online through the <a href="http://www.regulations.gov">www.regulations.gov</a> website.
If you prefer to file your comment on paper, write ``Seven & i
Holdings, Ltd.; File No. 201 0108'' on your comment and on the
envelope, and mail your comment to the following address: Federal Trade
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite
CC-5610 (Annex D), Washington, DC 20580; or deliver your comment to the
following address: Federal Trade Commission, Office of the Secretary,
Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610 (Annex
D), Washington, DC 20024. If possible, submit your paper comment to the
Commission by courier or overnight service.
Because your comment will be placed on the publicly accessible
website at <a href="http://www.regulations.gov">www.regulations.gov</a>, you are solely responsible for making
sure that your comment does not include any sensitive or confidential
information. In particular, your comment should not include any
sensitive personal information, such as your or anyone else's Social
Security number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include any
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2),
16 CFR 4.10(a)(2)--including in particular competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request, and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted on <a href="http://www.regulations.gov">www.regulations.gov</a>--as legally required by FTC Rule
4.9(b)--we cannot redact or remove your comment from that website,
unless you submit a confidentiality request that meets the requirements
for such treatment under FTC Rule 4.9(c), and the General Counsel
grants that request.
Visit the FTC website at <a href="http://www.ftc.gov">http://www.ftc.gov</a> to read this Notice and
the news release describing this matter. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding, as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before August 19, 2021. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see <a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
Analysis of Agreement Containing Consent Orders To Aid Public Comment
I. Introduction
The Federal Trade Commission (``Commission'') has accepted for
public comment, subject to final approval, an Agreement Containing
Consent Orders (``Consent Agreement'') from Seven & i Holdings Co.,
Ltd., a Japanese company, 7-Eleven, Inc., the U.S. subsidiary,
(collectively, ``7-Eleven'') and Marathon Petroleum Corporation
(``Marathon'') (collectively, the ``Respondents''). The Consent
Agreement is designed to remedy the anticompetitive effects that likely
are resulting from 7-Eleven's consummated acquisition of Marathon's
wholly-owned subsidiary Speedway LLC (``Speedway''). The Commission
also issued the Order to Maintain Assets included in the Consent
Agreement. Pursuant to Commission Rules of Practice, a consent
agreement was proposed prior to Respondents' consummation of the
transaction, but the Commission had not accepted the proposal because a
majority did not find certain provisions in the proposal sufficient to
fully resolve competitive concerns stemming from the transaction. 7-
Eleven closed on the acquisition on May 14, 2021 with full knowledge
the acquisition was in violation of Section 7 of the Clayton Act and
Section 5 of the FTC Act.
Respondents subsequently agreed to a revised proposed Decision and
Order (``Order''), described herein, that restores competition lost
from the transaction. Under the terms of the Order included in the
Consent Agreement, 7-Eleven must divest to Commission-approved Buyers
certain Speedway retail fuel outlets and related assets in 291 local
markets, and certain 7-Eleven retail fuel outlets and related assets in
2 local markets, across 20 states. The Order requires the divestitures
to take place no later than 180 days after May 14, 2021, the day 7-
Eleven closed on its acquisition of Marathon's assets. The Commission
prefers divestitures to upfront buyers that occur close in time with
the closing of the main transaction, but Commission orders will allow
for a longer divestiture period when specific, demonstrable
circumstances warrant. In this matter, the Commission recognizes that
the particular logistical and regulatory requirements of transferring
293 stations across 20 states necessitates a longer process of rolling
divestitures to three Buyers. To ensure that as many divestitures
happen as quickly as possible, the Order requires that 7-Eleven divests
the outlets to the Buyers based on the Buyer-approved divestiture
schedules incorporated into the Order, and that 7-Eleven meets specific
divestiture benchmarks at 90, 120, and 150 days.
The Order to Maintain Assets requires Respondents to operate and
maintain each divestiture outlet in the normal course of business
through the date the Commission-approved Buyer acquires the outlet. In
addition, the Order and Order to Maintain Assets require that until 7-
Eleven divests the outlets, it must maintain separate retail fuel
pricing teams and keep information related to pricing decisions for the
divestiture outlets separate from the retail fuel pricing for 7-
Eleven's other outlets.
The Order also prohibits 7-Eleven from enforcing noncompete
provisions in its franchise agreements against current franchisees or
others who might seek employment at the divestiture outlets. This
provision reduces the likelihood any 7-Eleven noncompete provisions
will have a chilling effect on
[[Page 38345]]
franchisees or others in seeking employment or doing business with the
divestiture outlets. Given that 7-Eleven consummated an illegal
transaction, expressly safeguarding the Buyers' access to essential
employees or business partners is particularly necessary to protect the
effectiveness of the divestitures.
The Commission has placed the Consent Agreement on the public
record for 30 days to solicit comments from interested persons.
Comments received during this period will become part of the public
record. After 30 days, the Commission will review the comments received
and decide whether it should withdraw, modify, or make the Order final.
II. The Respondents
Seven & i Holdings Co., Ltd., a publicly-traded company
headquartered in Tokyo, Japan, owns and operates convenience stores and
retail fuel outlets worldwide under the 7-Eleven brand. 7-Eleven, Inc.
owns, operates, and franchises approximately 9,000 stores in the United
States, making it the largest convenience store chain in the country.
Roughly 46 percent of 7-Eleven's stores offer fuel. 7-Eleven's revenue
in 2020 totaled over $20 billion, with fuel sales accounting for over
$13 billion.
Marathon, a publicly-traded company headquartered in Findlay, Ohio,
operates a vertically-integrated refining, marketing, retail, and
transportation system for petroleum and petroleum products. Marathon is
the largest U.S. refiner, with approximately 2.9 million barrels per
day of crude oil refining capacity. In 2020, Marathon's revenues
totaled over $69 billion. Marathon's former wholly-owned subsidiary,
Speedway, controls and sets retail fuel pricing at 3,898 retail
transportation fuel and convenience stores across the United States,
making it the third-largest domestic chain of company-owned and -
operated retail fuel outlets and convenience stores. Speedway's 2020
retail business revenues totaled over $19 billion, with sales of nearly
6 billion gallons of gasoline and diesel in 2019.
III. The Transaction
Pursuant to an Asset Purchase Agreement dated August 2, 2020, 7-
Eleven acquired substantially all of Marathon's Speedway retail assets
for approximately $21 billion, subject to adjustments (the
``Transaction''). 7-Eleven and Marathon also entered into a 15-year
agreement under which Marathon will supply and transport fuel to the
Speedway business, with a base volume of 7.7 billion gallons per year
of gasoline and diesel.
The Commission's Complaint alleges the Transaction violates 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, by
substantially lessening competition for the retail sale of gasoline
and/or the retail sale of diesel in 293 local markets across 20 states.
IV. The Retail Sale of Gasoline and Diesel
The Commission's Complaint alleges that relevant product markets in
which to analyze the Transaction are the retail sale of gasoline and
the retail sale of diesel. Consumers require gasoline for their
gasoline-powered vehicles and can purchase gasoline only at retail fuel
outlets. Likewise, consumers require diesel for their diesel-powered
vehicles and can purchase diesel only at retail fuel outlets. The
retail sale of gasoline and the retail sale of diesel constitute
separate relevant markets because the two are not interchangeable.
Vehicles that run on gasoline cannot run on diesel and vehicles that
run on diesel cannot run on gasoline.
The Commission's Complaint alleges 293 local relevant geographic
markets in which to assess the competitive effects of the Transaction
within the following states: Arizona; California; Florida; Illinois;
Indiana; Kentucky; Massachusetts; Michigan; North Carolina; New
Hampshire; Nevada; New York; Ohio; Pennsylvania; Rhode Island; South
Carolina; Tennessee; Utah; Virginia; and West Virginia.
The geographic markets for retail gasoline and retail diesel are
highly localized, depending on the unique circumstances of each area.
Each relevant market is distinct and fact-dependent, reflecting many
considerations, including commuting patterns, traffic flows, and outlet
characteristics. Consumers typically choose between nearby retail fuel
outlets with similar characteristics along their planned routes. The
geographic markets for the retail sale of diesel are similar to the
corresponding geographic markets for retail gasoline, as many diesel
consumers exhibit preferences and behaviors similar to those of
gasoline consumers.
The Transaction substantially lessens competition in each of these
local markets, resulting in 264 highly concentrated markets for the
retail sale of gasoline and 153 highly concentrated markets for the
retail sale of diesel fuel, with many of the 293 markets presenting
concerns for both products. Retail fuel outlets compete on price, store
format, product offerings, and location, and pay close attention to
competitors in close proximity, on similar traffic flows, and with
similar store characteristics. In each of the local gasoline and diesel
retail markets, the Transaction reduces the number of competitively
constraining independent market participants to three or fewer. 7-
Eleven will be able to raise prices unilaterally in markets where 7-
Eleven and Speedway are close competitors. Absent the Transaction, 7-
Eleven and Speedway would have continued to compete head to head in
these local markets.
Moreover, the Transaction enhances the incentives for
interdependent behavior in local markets where, including 7-Eleven,
only two or three competitively constraining independent market
participants remain. Two aspects of the retail fuel industry make it
vulnerable to such coordination. First, retail fuel outlets post their
fuel prices on price signs that are visible from the street, allowing
competitors easily to observe each other's fuel prices. Second, retail
fuel outlets regularly track their competitors' fuel prices and change
their own prices in response. These repeated interactions give retail
fuel outlets familiarity with how their competitors price and how
changing prices affect fuel sales.
Entry into each relevant market will not be timely, likely, or
sufficient to deter or counteract the anticompetitive effects arising
from the Transaction. Significant entry barriers include the
availability of attractive real estate, the time and cost associated
with constructing a new retail fuel outlet, and the time associated
with obtaining necessary permits and approvals.
V. The Order
The Order remedies the Transaction's likely anticompetitive effects
by requiring 7-Eleven to divest Speedway retail fuel outlets in 291
local markets, and 7-Eleven retail fuel outlets in 2 local markets, in
three separate packages, to CrossAmerica Partners LP (``CAPL''),
Jacksons Food Stores, Inc. (``Jacksons''), and Anabi Oil Corporation
(``Anabi'') (collectively, the ``Buyers'').
CAPL is a publicly-traded master limited partnership and a
wholesale supplier of motor fuels, a convenience store operator, and an
owner and lessor of real estate used in the retail distribution of
motor fuels. CAPL distributes branded and unbranded fuel to
approximately 1,800 locations and owns or leases approximately 1,100
sites, including 150 company-operated sites.
[[Page 38346]]
In 2020, the Commission fined Alimentation Couche-Tard Inc.
(``ACT'') and its then-affiliate CAPL $3.5 million to settle
allegations that the companies violated a 2018 Commission order
requiring divestitures of 10 retail fuel outlets related to ACT's
acquisition of Holiday Companies. ACT controlled CAPL's general partner
when the alleged order violation occurred and agreed to divest a
package of retail fuel outlets that were part of CAPL's retail network
to resolve the Commission's concerns. The alleged order violation
resulted from, among other things, ACT's failure to divest the CAPL
outlets by the Commission-imposed deadline.
The alleged violation does not disqualify CAPL from consideration
as an acceptable buyer in this instance. CAPL has not been affiliated
with ACT in any way since November 2019, when Mr. Joseph V. Topper, Jr.
and his organization, the Topper Group, acquired the controlling
interest in CAPL's general partner from ACT, and thereby severed
completely CAPL's affiliation with ACT. CAPL has since revamped its
management. Mr. Topper now serves as CAPL's chairman of the board, and
he and his organization have the ability to appoint all members of
CAPL's board as well as control CAPL's operations and activities.
Moreover, prior to Mr. Topper acquiring control of CAPL, ACT agreed to
indemnify CAPL for penalties and legal costs associated with the
alleged order violation.
The two other Buyers are Jacksons and Anabi. Jacksons is a
privately-held corporation that controls a chain of over 230 Chevron-,
Shell-, and Texaco-branded retail fuel locations in six western states.
Jacksons also is a joint venture partner in Jackson Energy, a wholesale
fuel supply company that distributes gasoline and diesel fuel to retail
fuel outlets in the western United States. Anabi, a privately-owned and
operated retail fuel supplier, is one of the largest Shell-branded
distributors in California and controls retail fuel locations in
California, Nevada, and Alaska. The Commission is satisfied that the
Buyers present no competitive problems in markets where they will
acquire divested assets and are otherwise qualified to acquire and
operate the assets in their respective divestiture packages.
The Order requires 7-Eleven to divest: (a) 105 Speedway retail fuel
outlets and a single 7-Eleven retail fuel outlet to CAPL; (b) 63
Speedway retail fuel outlets to Jacksons; and (c) 123 Speedway retail
fuel outlets and a single 7-Eleven retail fuel outlet to Anabi. To
ensure that 7-Eleven is incentivized to complete all of the
divestitures in an expedient manner, the Order requires 7-Eleven to:
(1) Divest on Buyer-approved divestiture schedules, and (2) divest no
fewer than a certain number of outlets at certain points within the 180
day divestiture period.
Specifically, Paragraph II.A of the Order requires Respondents to
divest pursuant to the Buyer-approved divestiture schedules. Under
Paragraph XI.A.1 of the Order, 7-Eleven is required to submit to the
Commission the Buyer-approved divestiture schedules--identifying the
divestiture date for each location--within 60 days after May 14. The
Buyers will control the divestiture schedules, and those schedules are
enforceable by the Commission against 7-Eleven. The Order also requires
7-Eleven to meet certain divestiture benchmarks--with no fewer than 20
percent of each package divested within 90 days, an additional 20
percent of each package divested within 120 days, and an additional 20
percent of each package divested within 150 days of the main
Transaction closing. 7-Eleven will have to complete all of the
divestitures within 180 days. Taken together, this divestiture process
will incentivize 7-Eleven to complete the divestitures in a timely and
expeditious manner, and give the Commission close oversight into the
divestiture schedules.
The Order contains additional provisions designed to ensure the
effectiveness of the relief, and to prevent 7-Eleven from having access
to critical competitive information regarding the divestiture outlets.
The Order requires 7-Eleven and Marathon to maintain the economic
viability, marketability, and competitiveness of each divestiture asset
until the divestitures are complete. Also, the Order requires
Respondents to designate an Asset Maintenance Manager to oversee
operations of the divestiture assets to ensure the Respondents maintain
the divestiture assets' full economic viability, marketability, and
competitiveness until the divestitures are completed and to help
facilitate the transfer of the divestiture assets to the Buyers.
Additionally, the Order requires the Respondents to establish a
divestiture pricing team that will handle retail fuel pricing at the
divestiture outlets, and to prevent access and disclosure of that
pricing information to anyone other than the divestiture pricing team.
The Asset Maintenance Manager will oversee the divestiture pricing team
to ensure that confidential pricing information is not shared with
other employees at 7-Eleven who may price retail fuel at competing
stations. The Order requires the Respondents to institute information
technology procedures, authorizations, protocols, and any other
controls necessary to prevent unauthorized disclosure or access of
information to or from the divestiture pricing team. Finally, the Order
appoints The Claro Group as an independent third-party Monitor to
oversee the Respondents' compliance with the requirements of the Order
and to oversee the Asset Maintenance Manager.
The Order also contains provisions regarding Respondents' employees
and franchisees, designed to protect the viability of the divestiture
assets. Section V contains provisions to ensure that the Buyers face no
impediments in hiring employees necessary to operate the divestiture
assets as competitively as Speedway operated them before the
Transaction. Paragraph V.E prohibits 7-Eleven from enforcing noncompete
provisions against current franchisees or others who might seek
employment at the divestiture outlets. This provision reduces the
likelihood that the noncompete provisions will have a chilling effect
on franchisees or others in seeking employment or doing business with
the divestiture outlets. Given that 7-Eleven has consummated an illegal
transaction, expressly safeguarding the Buyers' access to essential
employees or business partners is particularly necessary to protect the
effectiveness of the divestitures.
In addition to requiring retail fuel outlet divestitures, the Order
also requires 7-Eleven, for a period of five years, to obtain prior
Commission approval before purchasing any of the divested outlets, and
for a period of ten years, to provide the Commission prior notice of
future acquisitions of the divested outlets and of Commission-
identified retail fuel outlets located in the 293 local markets at
issue and three additional markets. These three additional markets
raised concerns that are addressed by Speedway's near-term exit from
the markets for reasons outside its control. The prior notice provision
is necessary because an acquisition in close proximity to divested
assets likely would raise the same competitive concerns as the
Transaction and may fall below the Hart-Scott-Rodino Act premerger
notification thresholds.
The purpose of this analysis is to facilitate public comment on the
Order, and the Commission does not intend this analysis to constitute
an official interpretation of the Order or to modify its terms in any
way. The Offices of the California and Florida Attorneys General
participated in both the investigation and the consent process.
[[Page 38347]]
By direction of the Commission, Chair Lina Khan not
participating.
April J. Tabor,
Secretary.
Joint Concurring Statement of Commissioners Rebecca Kelly Slaughter and
Rohit Chopra
Today, the Commission accepted for public comment an order that
would resolve competitive concerns raised by the illegal acquisition of
a Marathon Petroleum subsidiary by Seven & i Holdings (collectively
``7-Eleven''). The approximately $21 billion deal involved nearly 4,000
retail fuel and convenience store locations. On May 14, 2021, the
parties consummated the deal, despite knowing that the Commission had
outstanding--but resolvable--concerns about the transaction and about
the parties' proposal to resolve those concerns at the time. The
agreement to merge and the decision to consummate substantially
lessened competition in 293 local geographic markets across twenty
states, in violation of Section 5 of the FTC Act and Section 7 of the
Clayton Act. While Commission staff had worked diligently to resolve
the competitive concerns raised by the transaction, negotiating
hundreds of divestitures to three different buyers, the parties had not
reached a settlement that the Commission could accept when they closed.
The job of the Commission is to pursue the correct outcome in
cases, not the expedient one. Here, it was important to take the few
extra weeks necessary to ensure that the resolution would effectively
preserve competition and that any risk would be borne by the parties,
not by consumers, workers, and other market participants. Today's
settlement achieves that in a few key ways.
First, the order holds 7-Eleven accountable for executing
divestitures quickly and efficiently. The Commission's general
preference is for divestitures to happen as close in time to the
transaction as is practicable in order to protect competition.\1\ Here,
given the scope and complexity of the required divestitures, a longer
end date is justified, provided the divestitures happen on an ongoing
basis. Today's proposal includes provisions with rolling divestiture
timelines, benchmarked at 90, 120, and 150 days, and completed within
180 days from May 14, 2021--the date of the illegal merger. If 7-Eleven
fails to follow these benchmarks and the buyers' schedules, 7-Eleven
will be in violation of today's proposed order.
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\1\ See, e.g., Press Release, Fed. Trade Comm'n, FTC Requires
Divestitures as Condition of 7-Eleven, Inc. Parent Company's $3.3
Billion Acquisition of Nearly 1,100 Retail Fuel Outlets from
Competitor Sunoco (Jan. 18, 2020), <a href="https://www.ftc.gov/news-events/press-releases/2018/01/ftc-requires-divestitures-condition-7-eleven-inc-parent-companys">https://www.ftc.gov/news-events/press-releases/2018/01/ftc-requires-divestitures-condition-7-eleven-inc-parent-companys</a> (requiring the parties divest 26 stations over
the course of 90 days); Press Release, Fed. Trade Comm'n, FTC
Approves Final Order Imposing Conditions on Arko Holdings Ltd.'s
Acquisition of Empire Petroleum Partners, LLC (Oct. 7, 2020),
<a href="https://www.ftc.gov/news-events/press-releases/2020/10/ftc-approves-final-order-imposing-conditions-arko-holdings-ltds">https://www.ftc.gov/news-events/press-releases/2020/10/ftc-approves-final-order-imposing-conditions-arko-holdings-ltds</a> (ordering
divestiture of 7 stations over the course of 20 days); Press
Release, Fed. Trade Comm'n, FTC Approves Final Order Imposing
Conditions on Tri Star Energy, LLC's Acquisition of Certain Assets
of Hollingsworth Oil Company, Inc., C & H Properties, and Ronald L.
Hollingsworth (Aug. 14, 2020), <a href="https://www.ftc.gov/news-events/press-releases/2020/08/ftc-approves-final-order-imposing-conditions-tri-star-energy">https://www.ftc.gov/news-events/press-releases/2020/08/ftc-approves-final-order-imposing-conditions-tri-star-energy</a> (ordering divestiture of 2 stations over the course
of 10 days); but see Press Release, Fed. Trade Comm'n, FTC Requires
Retail Fuel Station and Convenience Store Operator Alimentation
Couche-Tard Inc. and its affiliate CrossAmerica Partners LP to
Divest 10 Fuel Stations in Minnesota and Wisconsin as a Condition of
Acquiring Holiday Companies (Dec. 15, 2017), <a href="https://www.ftc.gov/news-events/press-releases/2017/12/ftc-requires-retail-fuel-station-convenience-store-operator">https://www.ftc.gov/news-events/press-releases/2017/12/ftc-requires-retail-fuel-station-convenience-store-operator</a> (allowing 120 days to find a buyer for
and divest 10 stations; the Commission later alleged the parties
violated the divestiture order, and the parties agreed to pay a $3.5
million civil penalty to the FTC to settle those allegations).
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Second, 7-Eleven will be prohibited from enforcing noncompete
provisions against current franchisees or others who might seek
employment at the divestiture outlets. Noncompete provisions generally
prevent workers and small business franchises from fairly bargaining
for employment and opportunity. In this instance, they could also
prevent divestiture buyers from accessing the talent that could best
facilitate their ability to restore competition in the relevant
markets. The prohibition in the order is consistent with prior
Commission action,\2\ but is especially important in this case, given
that 7-Eleven consummated an illegal transaction. Expressly
safeguarding the buyers' access to essential employees or business
partners is particularly necessary to protect the effectiveness of the
divestitures.
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\2\ See Statement of Commissioners Rohit Chopra and Rebecca
Kelly Slaughter in the Matter of DTE Energy/Generation Pipeline,
Fed. Trade Comm'n (Sept. 12, 2019), <a href="https://www.ftc.gov/system/files/documents/public_statements/1544138/joint_statement_of_chopra_and_slaughter_dte_energy-generation_pipeline_9-13-19.pdf">https://www.ftc.gov/system/files/documents/public_statements/1544138/joint_statement_of_chopra_and_slaughter_dte_energy-generation_pipeline_9-13-19.pdf</a>; Press Release, Fed. Trade Comm'n,
FTC Approves Final Order Imposing Conditions on Merger of Air
Medical Group Holdings, Inc. and AMR Holdco, Inc. (May 3, 2018),
<a href="https://www.ftc.gov/news-events/press-releases/2018/05/ftc-approves-final-order-imposing-conditions-merger-air-medical">https://www.ftc.gov/news-events/press-releases/2018/05/ftc-approves-final-order-imposing-conditions-merger-air-medical</a> (divestiture of
air ambulance services in Hawaii).
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The terms of this order are well-grounded in Commission precedent
and reflect learned experience from past orders. The Commission's past
experiences show that divestitures that are not carefully constructed
end up failing to adequately protect consumers, workers, and
competition.\3\ It is disturbing that 7-Eleven failed to resolve these
matters before consummating their illegal transaction. Typically,
merging parties will wait for the Commission to accept an order for
public comment before closing on their transaction. Here, the
transaction involved billions of dollars in thousands of unique
geographic markets across the United States; when parties propose
transactions this large and complex, with obvious violations of the
law, they must accept that proper review may take time. Notwithstanding
that scope, in this case, Commission staff conducted an extensive
investigation, identified overlaps, vetted divestiture buyers, and
negotiated terms of divestitures with the parties--all in a matter of
months. Working through the remaining concerns at the Commission level
would not have been and was not time-consuming.
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\3\ See Press Release, Fed. Trade Comm'n, FTC Releases Staff
Study Examining Commission Merger Remedies between 2006 and 2012
(Feb. 3, 2017), <a href="https://www.ftc.gov/news-events/press-releases/2017/02/ftc-releases-staff-study-examining-commission-merger-remedies">https://www.ftc.gov/news-events/press-releases/2017/02/ftc-releases-staff-study-examining-commission-merger-remedies</a>;
Fed. Trade Comm'n, A Study of the Commission's Divestiture Process
(1999), <a href="https://www.ftc.gov/sites/default/files/documents/reports/study-commissions-divestiture-process/divestiture_0.pdf">https://www.ftc.gov/sites/default/files/documents/reports/study-commissions-divestiture-process/divestiture_0.pdf</a>.
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7-Eleven chose to close under a cloud of legal uncertainty rather
than to resolve its issues with the Commission; it learned that this
Commission will not be dared into accepting settlements we do not find
adequate. We hope other parties will learn that working constructively
with the Commission--rather than consummating an illegal merger--is a
more effective and responsible path.
Statement of Commissioners Noah Joshua Phillips and Christine S. Wilson
Today, the Federal Trade Commission has accepted for public comment
a consent agreement resolving all competition concerns presented by
Seven & i Holdings Co.'s acquisition of nearly 4,000 gas stations from
Marathon Petroleum Corporation. A settlement in this matter is long
overdue. As we noted in our statement of May 14, 2021,\1\ the day on
which the parties consummated their transaction, the Commission had
[[Page 38348]]
ample opportunity to act before the parties merged.\2\
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\1\ See Statement of Commissioners Noah Joshua Phillips &
Christine S. Wilson, Seven & i Holdings Co., Ltd./Marathon Petroleum
Corp., FTC File No. 201-0108 (May 14, 2021), <a href="https://www.ftc.gov/system/files/documents/publicstatements/1590067/2010108sevenmarathonphillipswilsonstatement.pdf">https://www.ftc.gov/system/files/documents/publicstatements/1590067/2010108sevenmarathonphillipswilsonstatement.pdf</a>.
\2\ Indeed, the settlement before the Commission on May 14
required the divestiture of 293 fuel outlets, see Press Release, 7-
Eleven Inc., Response to FTC Commissioner Statement (May 14, 2021),
<a href="https://corp.7-eleven.com/corppress-releases/05-14-2021-7-eleven-inc-response-to-ftc-commissioner-statement">https://corp.7-eleven.com/corppress-releases/05-14-2021-7-eleven-inc-response-to-ftc-commissioner-statement</a>; and the settlement
unanimously accepted by the Commission today similarly requires the
divestiture of 293 fuel outlets. Commissioners Slaughter and Chopra
highlight the order provision that prohibits Seven & i's subsidiary
7-Eleven from enforcing noncompete provisions against current
franchisees or others who might seek employment at the divestiture
outlets. This narrow provision is consistent with previous
Commission orders that impose conditions to ensure that divested
assets have access to the employees necessary to ensure the success
of the divestiture.
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To the extent the Analysis to Aid Public Comment or other
statements issued suggest that Seven & i Holdings or its U.S.
subsidiary 7-Eleven Inc. acted in bad faith, the public is free to read
our earlier statement and Seven & i Holding's side of the story,\3\ the
veracity of which no commissioner has disputed in the month since they
were issued. Those accounts paint a different, and regrettable, picture
of what happened.
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\3\ Statement of Commissioners Noah Joshua Phillips & Christine
S. Wilson, supra note 1; Press Release, 7-Eleven, Inc., supra note
2.
We thank our staff for their diligence, professionalism, and
responsiveness throughout this process; the Commission's failures here
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are in no way a reflection of their efforts.
[FR Doc. 2021-15350 Filed 7-19-21; 8:45 am]
BILLING CODE 6750-01-P
</pre></body>
</html>Indexed from Federal Register on July 20, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.