On November 22, 2017, the FTC announced that retail fuel station and convenience store operator Alimentation Couche-Tard Inc. (“ACT”) agreed to divest three fuel stations in Alabama to settle FTC charges that ACT’s proposed acquisition of Jet-Pep, Inc. (“Jet-Pep”) would violate federal antitrust law.
Under the terms of the deal, ACT will acquire ownership or operation of 120 Jet-Pep fuel outlets with convenience stores – 18 via Circle K, a wholly-owned subsidiary of ACT, and 102 via CrossAmerica Partners LP, over which Circle K has operational control and management.
According to the complaint, the acquisition would increase both the likelihood of successful coordination among the remaining firms and the likelihood that ACT will unilaterally exercise market power in three local retail fuel markets. The complaint alleges that without a remedy, the acquisition of Jet-Pep by ACT would reduce the number of independent market participants from three or fewer in Brewton, Monroeville, and Valley, Alabama.
To resolve the FTC’s competitive concerns, ACT is required to divest the three retail fuel stations in these three local markets to acceptable buyers within 120 days after the transaction closes. The agreement also requires ACT to maintain the economic viability, marketability, and competitiveness of each station until the divestiture is complete. Without the divestitures, the FTC alleged, the acquisition would likely substantially lessen competition and lead to higher prices in these local markets.
The FTC’s settlement agreement with ACT demonstrates that the FTC continues to focus on narrow markets. It also demonstrates that the FTC will under some circumstances allow merging parties to close their transactions prior to identifying a buyer for the divested assets. Here, no upfront buyer was required.