Antitrust Lawyer Blog Commentary on Current Developments

FTC Closes Hilcorp Alaska Investigation

On November 7, 2012, the FTC voted 5-0 to close its investigation of Hilcorp's proposed acquisition of Marathon's Cook Inlet, an Alaskan provider of natural gas without taking any action.
While initial concerns were raised about the anticompetitive implications of a merger between two of the three main natural gas providers in Alaska, which combined account for nearly 90 percent of all gas production in Alaska, recent anxieties towards meeting statewide energy demand mitigated such concerns.

Reports indicated that Marathon's natural gas fields are mature, meaning that they reached peak production and are seeing a decline in output. This has led many in Alaska to fear a shortage of natural gas over the course of the year, including residents in the Anchorage metropolitan area, for whom Marathon provides nearly all of their natural gas. The merger between Marathon and Hilcorp may help to alleviate this situation by consolidating the production of the two companies.

In response to these growing energy concerns, the Alaskan Attorney General negotiated a consent decree that called for the merger to proceed unimpeded, with provisions that mandate a five-year price cap for consumers.

Though the FTC has deferred the decision to the state government of Alaska, it states that a conclusion has yet to be reached about whether or not any anti-competition laws were violated in permitting the merger, and that it maintains the right to intervene in the future as public interests dictate.


Thomas Chao

(202) 589-1834
tchao@dbmlawgroup.com