BP Amoco - ARCO merger disapproved by the US government
3 February 2000
Following the decision of the US Federal Trade Commission (FTC) to oppose the proposed combination of BP Amoco and ARCO, the two companies announced their intention to pursue the issue in court.
The companies said in a joint statement: "We are surprised and disappointed that the FTC has rejected all efforts for a positive resolution. We have consistently been open to improvement of our original proposal. (...) We regret that the only course now open to us is to resolve the issue through litigation but we believe we have a compelling case in support of our combination which we will argue vigorously in court."
The statement added: "Any suggestion that there is a special West Coast market for Alaskan crude oil that functions independently of world crude prices is without foundation. In fact, the proposed combination of our companies will drive down Alaskan production costs, making Alaskan crude oil more competitive in the world market. This fact was recognized in the charter agreement reached between the companies and the State of Alaska last December. West Coast consumers will benefit because BP Amoco has undertaken to continue ARCO's low-price, high-volume marketing strategy. Since there is no refining or marketing overlap between the two companies there should be no adverse competition issues concerning gasoline prices."
The proposed $26.8 billion combination of BP Amoco and ARCO was announced on 1 April 1999 and was subsequently approved by the European Union and shareholders of both companies. An agreement was also reached with the State of Alaska, as well as with California Governor Gray Davis. The proposed merger, however, was opposed by the FTC on the grounds of its negative impact on competition in the USA. West Coast and Alaska.
Source: BP Amoco