ST. JOHN, New Brunswick — Irving Oil has voluntarily agreed to give up its rights to some terminal and pipeline assets in Maine after the U.S. Federal Trade Commission said the company’s acquisition of certain ExxonMobil assets was anti-competitive and could push up gas and diesel prices.
The proposed settlement will ensure competition in gasoline and distillates terminal services in the Bangor, South Portland and Penobscot Bay areas and “resolves the FTC’s charges that the acquisition is anti-competitive and could result in higher gasoline and diesel prices for consumers,” the agency said in a statement.
Irving Oil spokeswoman Carolyn Van der Veen called the regulatory review process routine for transactions of this size.
“It is routine for larger transactions to receive regulatory review prior to closing, and it is not unusual for that review to necessitate changes to the structure of those transactions,” she said from Saint John. “Irving was always mindful that the transaction would need to receive regulatory approval before we could close.”
Van der Veen added that the New Brunswick-based company assuaged U.S. regulators’ concerns by voluntarily partnering with Buckeye Partners LP, one of the largest and most experienced refined petroleum pipeline and terminal operators in the United States.
Under the modified transaction structure, Irving Oil and Buckeye will form a joint venture to acquire the ExxonMobil South Portland terminal.
Gary Bischof, general manager of Irving Oil Commercial, said the transaction not only represents another chapter in the company’s long history of successful partnerships in the distribution and marketing of energy products, but also “exemplifies our long-term commitment to the economy and long-term energy security of the state of Maine.”
“We believe our joint venture with Buckeye Partners will be beneficial for our two companies, as well as for the many customers in Maine who use these terminals for wholesale supply,” he said.
Energy analyst Toby Couture said Irving Oil has been trying to make inroads in the New England market for years as part of an expansion strategy.
“It already represents a significant share in the New England market and this decision by U.S. regulators could potentially affect that strategy,” he said. “From one angle this could be seen as a setback.”
However, Couture said the agency could be trying to flex some muscle in front of consumers upset about rising energy costs.
“Given gas prices lately, this could be about U.S. regulators trying to appear as if they are doing something,” he said. “They don’t have many meaningful levers to work with in terms of impacting oil prices but they certainly can address competition issues.
“I don’t want to say it’s merely politics because there certainly are competition concerns but it could play a part.”
According to the trade commission, the original transaction would have substantially increased concentration in certain geographic markets in Maine.
Irving and ExxonMobil are two of only three firms that can independently offer or provide gasoline terminal services in the Bangor and Penobscot Bay area, for example.
The agency’s proposed settlement eliminates these concerns by requiring Irving to give up its acquisition rights to ExxonMobil’s Bangor terminal and intrastate pipeline as well as 50 percent of ExxonMobil’s South Portland terminal to Buckeye Partners.
The Federal Trace Commission’s proposed settlement is open to public comment for 30 days before it is made final.
“We continue to closely monitor deals in the energy sector to ensure that consumers of petroleum products are served by competitive markets,” Richard Feinstein, director of the FTC Bureau of Competition, said. “We expect the relief obtained here to accomplish that goal and protect consumers from higher gas prices.”