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Petroleum Mergers and Competition in the Northeast United States

48 Pages Posted: 29 Apr 2010  

Christopher T. Taylor

U.S. Federal Trade Commission - Bureau of Economics

Louis Silvia

Government of the United States of America - Federal Trade Commission

Date Written: April 26, 2010

Abstract

Sunoco’s 2004 acquisition of El Paso’s, New Jersey refinery and Valero’s 2005 acquisition of Premcor’s Delaware refinery significantly consolidated refinery control in the U.S. Northeast. The Federal Trade Commission investigated both transactions but challenged neither. We examine the FTC’s enforcement rationale and test whether these mergers were associated with post-merger price increases in either gasoline or diesel at retail and wholesale levels. Our findings indicate that the transactions were largely competitively neutral. There was some indication that some unbranded rack prices may have increased after the mergers, but this result was not robust across controls or assumptions. In some other instances, prices in merger affected areas may have fallen relative to prices elsewhere after the transactions.

Keywords: Merger retrospectives, Petroleum industry, Horizontal market structure

JEL Classification: L1, L41, L71

Suggested Citation

Taylor, Christopher T. and Silvia, Louis, Petroleum Mergers and Competition in the Northeast United States (April 26, 2010). Available at SSRN: https://ssrn.com/abstract=1596166 or http://dx.doi.org/10.2139/ssrn.1596166

Christopher T. Taylor (Contact Author)

U.S. Federal Trade Commission - Bureau of Economics ( email )

601 Pennsylvania Avenue, NW
Antitrust Division
Washington, DC 20580
United States

Louis Silvia

Government of the United States of America - Federal Trade Commission ( email )

600 Pennsylvania Ave., NW
Washington, DC 20580
United States

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