As had been expected, the Federal Trade Commission (FTC)yesterday approved the $81 billion combination of Exxon and Mobil.The companies said they have accepted the terms of the FTC consentorder.

“The FTC’s decision, coupled with the European Commission’sapproval gained earlier, cleared the way for the merger to proceed.Exxon and Mobil moved quickly to close the transaction and tolaunch the world’s premier petroleum and petrochemical company,which will be known as Exxon Mobil Corp., incorporated in NewJersey,” said Exxon Chairman Lee Raymond. “The merged companyexpects that the scale of the worldwide near-term cost savings andthe long-term strategic benefits will likely exceed those announcedlast year. The merger will allow Exxon Mobil to compete moreeffectively with the recently combined multinational oil companiesand the large state-owned oil companies that are rapidly expandingoutside their home areas.”

In the United States, Exxon’s and Mobil’s exploration;production; natural gas; chemical; Gulf Coast, Midwest and RockyMountains refining businesses; and the vast majority of servicestations are not affected by the consent order. While the FTCruling predominately affects aspects of the U.S. downstream, themerged company will retain a significant presence in these businesssegments in the United States. By most measures of capacity andsales, the merged company will be a strong competitor in theseareas, the companies said.

FTC conditions the companies must meet include:

— Exxon selling its fee and leased service stations from NewYork to Maine and assigning its contracts with all dealers anddistributors in those areas to a new supplier;

— Mobil selling its fee and leased service stations from NewJersey through Virginia and assigning its contracts with alldealers and distributors in those areas to a new supplier. Inaddition Mobil selling its East Boston, MA; and Manassas, VA,terminals.

— Mobil selling its interest in TETCO, a Texas motor fueldistributor, selling its interests in 10 service stations in Dallasand Fort Worth, and assigning its contracts with distributors infive areas in Texas – Dallas, Austin, San Antonio, Houston andBryan-College Station;

— Exxon selling its Benicia, CA, refinery; withdrawing fromretail fuels marketing in four areas (Oakland, San Francisco, SanJose and Santa Rosa), and selling its remaining service stationsand assigning its dealer and distributor contracts in the state;and

— Exxon Mobil Corp. selling either Exxon’s 48.8 percentinterest in the Plantation pipeline or Mobil’s 11.49 percentinterest in the Colonial pipeline, and Mobil’s 3.08 percentinterest in the Trans-Alaska Pipeline System (TAPS).

In related news, 10 attorneys general reached a divestitureagreement to help keep retail fuel prices competitive after the $81billion combination of Exxon and Mobil. The agreement resolves anaction filed by the states over antitrust concerns resulting fromthe merger.

“The settlement is intended to preserve the status quo byreplacing a large gasoline supplier to Pennsylvania with anotherlarge gasoline supplier,” said Pennsylvania Attorney General MikeFisher. “I’m satisfied that this agreement, requiring the largestdivestiture in FTC history, will preserve the current level ofcompetition in Pennsylvania.”

Fisher said under the terms of one of four regional consentagreements, Mobil must sell all of its retail assets inPennsylvania, New Jersey, Delaware, Maryland, Virginia and theDistrict of Columbia to a single, pre-approved buyer within ninemonths. In Pennsylvania, 351 Mobil stations will be affected. Aprospective buyer has yet to be identified.

The action, filed by the states in federal court, claimed thatthe merger had the potential to significantly reduce competition inPennsylvania and could lead to higher gas prices. In all, themerger affects an estimated 1,700 retail gasoline outletsthroughout the Northeast.

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