Alaska Gov. Tony Knowles and BP Amoco signed a major agreementyesterday that not only clears the way in Alaska for the oilgiant’s proposed acquisition of Atlantic Richfield Co., but mayhelp the company score some points with the Federal TradeCommission (FTC). At least that’s what BP Amoco officials arehoping.

“We believe this will provide us with the foundation for morefocused and productive discussions with the Federal TradeCommission. Our aim is now to progress those discussions quicklyand constructively, so that we can get on with bringing BP Amocoand Arco together….,” said BP Amoco CEO Sir John Browne.

He believes the Alaska agreement, combined with a deal reachedwith California Gov. Gray Davis last month, are “critical” towinning FTC approval of BP Amoco’s $29 billion purchase of Arco.The California deal addressed minor issues, such as philanthropicfunding, but did not resolve the key antitrust concerns of thestate.

One industry analyst remarked that BP Amoco has spent more timedealing with the “mouse,” Alaska, than with the “elephant” — FTC.”There are, indeed, much bigger concerns that BP has to resolvenow. They’re hoping that this [Alaska] agreement will help them intheir negotiations” with the FTC, an informed source said.

Industry observers believe BP Amoco is going to do whatever ittakes to win Arco. “I think that’s true. But that means they’regoing to have to sit down and start dealing with the FTC reallyhard. Up until now they’ve taken a more confrontational approach,”the source noted.

He said the FTC has been “anonymously leaking” hints this weeksuggesting there are serious problems with the proposed transactionin order to get BP Amoco to jump-start negotiations. He believesit’s entirely possible the FTC may resort to a lawsuit to “prompt”negotiations with the oil giant.

The FTC and three states-California, Oregon and Washington-aremostly concerned about the merger’s effect on gasoline prices inthe western region. They fear a marriage of BP Amoco and Arco wouldreduce competition and raise retail gas prices. The states arereviewing the transaction with the FTC, and haven’t ruled out thepossibility of a lawsuit to block the merger if concessions aren’tmade.

The FTC may be “looking at additional upstream divestitures[possibly in Alaska] to address the downstream concerns” posed bythe merger in California and other western states, the informedsource noted. Whatever happens, “Alaska is hoping that itsconcerns-because they are so different than those of the FTC’s-willbe at the table when they finally cut a deal.”

Although the battle with the FTC still awaits, BP Amocoofficials and Gov. Knowles trumpeted their agreement yesterday,which is designed to preserve competition on the North Slope. Keyprovisions call for BP Amoco to:

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.