60392 Federal Register / Vol. 69, No. 195 / Friday, October 8, 2004 / Notices 

1Commission Rule 4.2(d), 16 CFR 4.2(d). The 

comment must be accompanied by an explicit 

request for confidential treatment, including the 

factual and legal basis for the request, and must 

identify the specific portions of the comment to be 

withheld from the public record. The request will 

terminaling of gasoline, diesel fuel, and 

other light petroleum products, and a 

relevant geographic market may be as 

small as the area within a fifty-mile 

radius of Niles, Michigan (‘‘Niles 

Area’’). The proposed complaint further 

alleges that market for terminaling 

services in the Niles Area is highly 

concentrated and that, had the original 

proposed acquisition been 

consummated, concentration in that 

market would have increased by 800 

points, as measured by the HerfindahlHirschman Index. The acquisition as 

modified would not change market 

concentration in the Niles Area because 

it does not involve the acquisition of 

Shell’s Niles terminal. The proposed 

complaint also alleges that entry into 

the terminaling services market in the 

Niles Area is difficult and would not be 

timely, likely, or sufficient to deter or 

counteract the anticompetitive effects of 

the original proposed acquisition. 

The proposed complaint alleges that 

the acquisition, if consummated as 

originally proposed, may have led to a 

substantial lessening of competition in 

the supply of terminaling services for 

gasoline, diesel, and other light 

petroleum products in the Niles Area. 

The acquisition as originally proposed 

may have substantially increased 

concentration in a market that is already 

highly concentrated. The complaint 

further alleges competitive harm could 

result from the elimination of direct 

competition between Buckeye and Shell 

in the supply of terminaling services in 

the Niles Area, and from the increased 

likelihood of collusion or coordinated 

interaction between the remaining 

competitors in the relevant market. 

Terms of the Proposed Consent Order 

The Proposed Order requires Buckeye 

to provide prior notification to the 

Commission of an acquisition of any 

interest in the Niles terminal, for a 

period of ten years. The Proposed Order 

requires Shell to provide prior 

notification to the Commission of a sale 

or transfer of any interest in the Niles 

terminal, for a period of ten years. These 

provisions require Buckeye and Shell to 

comply with premerger notification and 

waiting periods similar to those found 

in the Hart-Scott-Rodino Antitrust 

Improvements Act of 1976, 15 U.S.C. 

18a. (‘‘HSR’’). 

Consistent with the Commission’s 

Statement of Policy Concerning Prior 

Approval and Prior Notice Provisions, 

60 FR 39745 (Aug. 3, 1995), the 

Proposed Order ensures that the 

Commission will have the appropriate 

mechanism to review a proposed sale of 

the Niles terminal by Shell, or a 

proposed acquisition of the Niles 

terminal by Buckeye, that may raise 

antitrust concerns but would not be 

reportable under HSR. The Proposed 

Order affords the Commission the 

opportunity to guard against such 

potentially anticompetitive transactions. 

By accepting the Proposed Order, 

subject to final approval, the 

Commission anticipates that the 

competitive problem alleged in the 

Complaint will be resolved. The 

purpose of this analysis is to invite 

public comment concerning the 

Proposed Order to aid the Commission 

in its determination of whether it 

should make final the Proposed Order 

contained in the agreement. This 

analysis is not intended to constitute an 

official interpretation of the Proposed 

Order or to modify its terms in any way.

By direction of the Commission. 

Donald S. Clark, 

Secretary.

[FR Doc. 04–22696 Filed 10–7–04; 8:45 am] 

BILLING CODE 6750–01–P

FEDERAL TRADE COMMISSION

[File No. 041 0039] 

Enterprise Products Partners L.P., et 

al.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

SUMMARY: The consent agreement in this 

matter settles alleged violations of 

federal law prohibiting unfair or 

deceptive acts or practices or unfair 

methods of competition. The attached 

Analysis to Aid Public Comment 

describes both the allegations in the 

draft complaint that accompanies the 

consent agreement and the terms of the 

consent order—embodied in the consent 

agreement—that would settle these 

allegations.

DATES: Comments must be received on 

or before October 29, 2004.

ADDRESSES: Comments should refer to 

‘‘Enterprise Products Partners L.P., et 

al., File No. 041 0039,’’ to facilitate the 

organization of comments. A comment 

filed in paper form should include this 

reference both in the text and on the 

envelope, and should be mailed or 

delivered to the following address: 

Federal Trade Commission/Office of the 

Secretary, Room H–159, 600 

Pennsylvania Avenue, NW., 

Washington, DC 20580. Comments 

containing confidential material must be 

filed in paper form, as explained in the 

Supplementary Information section. The 

FTC is requesting that any comment 

filed in paper form be sent by courier or 

overnight service, if possible, because 

U.S. postal mail in the Washington area 

and at the Commission is subject to 

delay due to heightened security 

precautions. Comments filed in 

electronic form (except comments 

containing any confidential material) 

should be sent to the following e-mail 

box: consentagreement@ftc.gov.

FOR FURTHER INFORMATION CONTACT:

Frank Lipson, FTC, Bureau of 

Competition, 600 Pennsylvania Avenue, 

NW., Washington, DC 20580, (202) 326–

2617.

SUPPLEMENTARY INFORMATION: Pursuant 

to Section 6(f) of the Federal Trade 

Commission Act, 38 Stat. 721, 15 U.S.C. 

46(f), and Section 2.34 of the 

Commission’s Rules of Practice, 16 CFR 

2.34, notice is hereby given that the 

above-captioned consent agreement 

containing a consent order to cease and 

desist, having been filed with and 

accepted, subject to final approval, by 

the Commission, has been placed on the 

public record for a period of thirty (30) 

days. The following Analysis to Aid 

Public Comment describes the terms of 

the consent agreement, and the 

allegations in the complaint. An 

electronic copy of the full text of the 

consent agreement package can be 

obtained from the FTC Home Page (for 

September 30, 2004), on the World 

Wide Web, at http://www.ftc.gov/os/

2004/09/index.htm. A paper copy can 

be obtained from the FTC Public 

Reference Room, Room 130–H, 600 

Pennsylvania Avenue, NW., 

Washington, DC 20580, either in person 

or by calling (202) 326–2222. 

Public comments are invited, and may 

be filed with the Commission in either 

paper or electronic form. Written 

comments must be submitted on or 

before October 29, 2004. Comments 

should refer to ‘‘Enterprise Products 

Partners L.P., et al., File No. 041 0039,’’

to facilitate the organization of 

comments. A comment filed in paper 

form should include this reference both 

in the text and on the envelope, and 

should be mailed or delivered to the 

following address: Federal Trade 

Commission/Office of the Secretary, 

Room H–159, 600 Pennsylvania 

Avenue, NW., Washington, DC 20580. If 

the comment contains any material for 

which confidential treatment is 

requested, it must be filed in paper 

(rather than electronic) form, and the 

first page of the document must be 

clearly labeled ‘‘Confidential.’’ 1 The 

Federal Register / Vol. 69, No. 195 / Friday, October 8, 2004 / Notices 60393

be granted or denied by the Commission’s General 

Counsel, consistent with applicable law and the 

public interest. See Commission Rule 4.9(c), 16 CFR 

4.9(c).

FTC is requesting that any comment 

filed in paper form be sent by courier or 

overnight service, if possible, because 

U.S. postal mail in the Washington area 

and at the Commission is subject to 

delay due to heightened security 

precautions. Comments filed in 

electronic form should be sent to the 

following e-mail box: 

consentagreement@ftc.gov.

The FTC Act and other laws the 

Commission administers permit the 

collection of public comments to 

consider and use in this proceeding as 

appropriate. All timely and responsive 

public comments, whether filed in 

paper or electronic form, will be 

considered by the Commission, and will 

be available to the public on the FTC 

Web site, to the extent practicable, at 

http://www.ftc.gov. As a matter of 

discretion, the FTC makes every effort to 

remove home contact information for 

individuals from the public comments it 

receives before placing those comments 

on the FTC Web site. More information, 

including routine uses permitted by the 

Privacy Act, may be found in the FTC’s 

privacy policy, at http://www.ftc.gov/

ftc/privacy.htm.

Analysis of Proposed Consent Order To 

Aid Public Comment 

The Federal Trade Commission 

(‘‘Commission’’) has accepted, subject to 

final approval, an Agreement 

Containing Consent Orders (‘‘Consent 

Agreement’’) from Enterprise Products 

Partners L.P. (‘‘Enterprise’’) and Dan L. 

Duncan (‘‘Duncan’’), the ultimate parent 

entity of Enterprise. (Enterprise and 

Duncan are hereinafter referred to 

collectively as ‘‘Respondents.’’) The 

Consent Agreement contains a Decision 

and Order (’’Consent Order’’) that is 

designed to remedy the anticompetitive 

effects of the proposed merger between 

Enterprise and GulfTerra Energy 

Partners L.P. (’’GulfTerra’’). Under the 

terms of the Consent Agreement, 

Respondents must divest (1) their 

interest in one of two competing 

pipelines that transport natural gas from 

the deepwater regions of the Gulf of 

Mexico and (2) their interest in one of 

two competing underground propane 

storage and terminaling facilities serving 

the Dixie Pipeline in Hattiesburg, 

Mississippi. The Consent Agreement 

also contains an Order to Hold Separate 

and to Maintain Assets (‘‘Hold Separate 

Order’’) which, among other things, is 

designed to preserve the viability, 

marketability and competitiveness of 

the assets to be divested under the 

proposed Consent Order. 

The proposed Consent Agreement has 

been placed on the public record for 

thirty days for receipt of comments by 

interested persons. Comments received 

during this period will become part of 

the public record. After thirty days, the 

Commission will again review the 

Consent Agreement and any comments 

received and will decide whether it 

should withdraw from the agreement or 

make final the agreement’s proposed 

Consent Order. 

I. The Complaint 

Pursuant to certain agreements dated 

December 15, 2003 (as amended), 

Enterprise, a publicly traded limited 

partnership that provides midstream 

energy services to customers throughout 

the Southeastern and Midwestern 

United States, proposes to merge with 

GulfTerra in a transaction that will 

create a midstream energy partnership 

with an estimated enterprise value of 

approximately $13 billion. The 

Commission’s complaint (‘‘Complaint’’) 

alleges that the proposed merger would 

violate Section 7 of the Clayton Act, as 

amended, 15 U.S.C. 18, and Section 5 of 

the Federal Trade Commission Act, as 

amended, 15 U.S.C. 45, in the markets 

for (1) pipeline transportation of natural 

gas from the West Central Deepwater 

region of the Gulf of Mexico (‘‘West 

Central Deepwater’’ market) and (2) 

propane storage and terminaling 

services in Hattiesburg, Mississippi. The 

West Central Deepwater region of the 

Gulf of Mexico encompasses the East 

Breaks, Garden Banks, Keithley Canyon 

and Alaminos Canyon areas in the Gulf 

of Mexico, areas defined by the United 

States Department of Interior Minerals 

Management Service. These areas are in 

the ‘‘deepwater’’ part of the Gulf of 

Mexico farther from shore, in which 

water depths exceed 1000 feet. The 

proposed Consent Agreement would 

remedy the alleged violations by 

restoring the lost competition that 

would result from the merger in each of 

these markets. 

II. The Consent Agreement 

A. Pipeline Transportation of Natural 

Gas 

The Gulf of Mexico accounts for 

nearly one quarter of the natural gas 

supplies in the United States. Natural 

gas producers ship their production out 

of the Gulf of Mexico to the Gulf Coast 

via pipelines. Enterprise and GulfTerra 

are direct and substantial competitors in 

the market for pipeline transportation of 

natural gas from the West Central 

Deepwater. 

Enterprise owns a 50 percent 

ownership interest in the Starfish 

Pipeline Company, LLC (‘‘Starfish’’), 

which owns the Stingray/Triton 

pipeline system in the West Central 

Deepwater market. Shell Gas 

Transmission (‘‘Shell’’) owns the 

remaining 50 percent interest in Starfish 

and exercises operational and 

management control over the Starfish 

assets. However, because the operating 

agreement provides that Enterprise must 

approve any commercial gas 

transportation agreements proposed by 

Shell with respect to Starfish, Enterprise 

effectively controls the competitive 

decisions of Starfish and the Stingray/

Triton pipeline system. GulfTerra owns 

the High Island Offshore System 

(‘‘HIOS’’) and its accompanying East 

Breaks lateral, which compete directly 

for pipeline transportation business in 

the West Central Deepwater market with 

Starfish’s Stingray/Triton pipeline 

system. 

The West Central Deepwater market is 

highly concentrated. The assets 

controlled wholly or in part by 

GulfTerra and Enterprise account for 

two of the three pipelines providing 

natural gas pipeline transportation 

services to the market. Combined, these 

two pipeline systems would control 60 

percent of the natural gas pipeline 

capacity in the West Central Deepwater 

market. The proposed merger would 

substantially increase industry 

concentration in this already highly 

concentrated market. Moreover, new 

entry into the pipeline transportation of 

natural gas from the West Central 

Deepwater market entails substantial 

sunk costs and is highly unlikely to 

constrain any post-merger exercise of 

market power by Respondents in the 

relevant market. By eliminating the 

actual, direct, and substantial 

competition that exists between 

Enterprise and GulfTerra in this market, 

the proposed merger would be 

substantially likely to cause significant 

competitive harm to producers of 

natural gas who must purchase pipeline 

transportation services in the West 

Central Deepwater market. 

The proposed Consent Order 

remedies the merger’s alleged 

anticompetitive effects in the West 

Central Deepwater market by requiring 

that Respondents divest either (1) their 

50 percent interest in Starfish, (the 

‘‘Starfish Interest’’) or (2) the HIOS/East 

Breaks pipeline system, (the ‘‘HIOS/East 

Breaks Assets.’’). If Respondents fail to 

divest either of these competing 

pipeline assets on or before March 31, 

2005, the Commission may appoint a 

Divestiture Trustee to divest either of 

the above referenced pipeline assets.

60394 Federal Register / Vol. 69, No. 195 / Friday, October 8, 2004 / Notices 

B. Propane Storage and Terminaling 

Services 

Propane is used as a heating fuel 

during the winter months in much of 

the Southeastern United States. Propane 

marketers generally purchase propane 

from the major supply sources in Texas 

and Louisiana and ship that propane 

eastward over the Dixie Pipeline System 

(‘‘Dixie’’), the only common carrier 

propane pipeline in the Southeast. 

Because of certain physical and capacity 

constraints on Dixie west of Baton 

Rouge, Louisiana, the segments of Dixie 

west of Baton Rouge are often full 

(capacity constrained) during the winter 

months. Therefore, propane shippers 

along Dixie often must purchase 

propane during the spring and summer 

(non-peak) seasons, ship it eastward on 

Dixie and store the propane at locations 

east of Baton Rouge, such as 

Hattiesburg, Mississippi 

(‘‘Hattiesburg’’). This enables these 

propane marketers to access Dixie’s 

unconstrained capacity during the 

winter months to meet the peak demand 

of their customers for heating fuel. 

Hattiesburg is the site of massive, 

naturally occurring underground salt 

domes, which when leached out, 

provide economic storage capacity for 

propane. The salt domes and associated 

terminaling facilities located at 

Hattiesburg receive propane from Dixie 

during the non-peak months and then 

re-inject propane into Dixie during the 

winter heating season. Dixie shippers 

and other propane marketers pay 

significant fees to the owners of propane 

storage facilities for the right to store 

propane at Hattiesburg and inject it into 

Dixie. Enterprise and GulfTerra are 

direct and substantial competitors in 

providing propane storage and 

terminaling services in Hattiesburg. 

Enterprise currently owns a 50 percent 

undivided interest in a propane storage 

and terminaling facility located in 

Hattiesburg (with Dynegy Midstream 

Services, L.P. owning the other 50 

percent interest). Enterprise also owns a 

100 percent interest in a second propane 

storage facility located in nearby Petal, 

Mississippi. GulfTerra currently owns 

and operates a wholly owned propane 

storage and terminaling facility in 

Hattiesburg. 

The market for propane storage and 

terminaling services in Hattiesburg is 

highly concentrated, with Enterprise 

and GulfTerra currently controlling 

approximately 53 percent of propane 

storage capacity in that market. The 

proposed merger would leave 

Respondents with an ownership interest 

in three of the four propane storage and 

terminaling facilities located in 

Hattiesburg and substantially increase 

concentration in an already highly 

concentrated market. Entry into the 

market for propane storage and 

terminaling services requires substantial 

sunk costs and such entry is highly 

unlikely in response to a post-merger 

increase in propane storage and 

terminaling fees at Hattiesburg. By 

eliminating the actual, direct, and 

substantial competition that exists 

between Enterprise and GulfTerra in the 

relevant market, the proposed merger 

would be substantially likely to cause 

significant competitive harm to propane 

marketers who would likely incur 

increased prices and fees for propane 

storage and terminaling services in 

Hattiesburg. These increased costs 

would likely be passed on to propane 

customers supplied from Hattiesburg. 

The proposed Consent Order 

remedies the alleged anticompetitive 

effect of this merger in the propane 

storage and terminaling services market 

in Hattiesburg by requiring that 

Respondents divest either (1) their 

undivided 50 percent interest in the 

facility Enterprise co-owns with 

Dynegy, (the ‘‘Enterprise Propane 

Storage Interest,’’) or (2) their wholly 

owned Hattiesburg propane storage 

facility (the ‘‘Enterprise Petal LPG 

Storage Facility’’). If Respondents fail to 

divest either of these competing 

propane storage and terminaling assets 

on or before December 31, 2004, the 

Commission may appoint a Divestiture 

Trustee to divest either of the above 

referenced assets. The December 31, 

2004 deadline for the divestiture of the 

specified propane storage and 

terminaling assets of Respondents at 

Hattiesburg is designed to assure that a 

new owner of the divested assets will be 

in place prior to the 2005–06 propane 

storage contract season, which begins in 

April 2005. 

The Commission believes that 

divestiture by Respondents of their 

partially owned assets in each market to 

a Commission-approved purchaser 

would restore competition in each of the 

two markets potentially affected by the 

merger. However, as certain third 

parties have contractual rights that may 

impact on Respondents’ ability to 

transfer such partially owned assets, or 

that may affect or delay the timing of 

any such transfer, the proposed Consent 

Order gives Respondents the option of 

divesting either their partially owned 

assets or their wholly owned assets in 

each relevant market by the dates 

specified in the proposed Consent 

Order. 

III. The Hold Separate Order 

Because the Consent Agreement 

would allow the merger to proceed prior 

to the completion of each of the 

required divestitures, the Consent 

Agreement contains a Hold Separate 

Order covering the Starfish Interest and 

the Enterprise Propane Storage Interest. 

The purpose of the Hold Separate Order 

is to ensure that the Starfish Interest and 

the Enterprise Storage Propane Interest 

operate independently from Enterprise 

and GulfTerra pending the divestitures 

required under the proposed Consent 

Order. The Hold Separate Order is also 

intended to ensure the continuing 

viability, marketability, and 

competitiveness of these partially 

owned assets until they are divested. 

The Commission has appointed 

Richard J. Black as a monitor to oversee 

the management and operations of the 

Starfish Interest and the Enterprise 

Propane Storage Interest until the 

divestitures required by the Consent 

Order are complete. Mr. Black has more 

than 15 years of relevant experience in 

the midstream energy services business, 

including experience in pipeline 

transportation of natural gas in the 

deepwater regions of the Gulf of Mexico 

and in the marketing and sale of natural 

gas liquids. 

To assure that the Commission 

remains informed about the status of the 

required divestitures, the proposed 

Consent Order requires Respondents to 

file reports with the Commission 

periodically until the divestitures 

required under the Consent Order are 

accomplished. The Hold Separate Order 

will remain in effect until the 

Respondents or the Divestiture Trustee 

successfully divests the assets required 

to be divested under the Consent Order. 

The purpose of this analysis is to 

facilitate public comment on the 

Consent Agreement. This analysis is not 

intended to constitute an official 

interpretation of the Consent 

Agreement, nor is it intended to modify 

its terms in any way.

By direction of the Commission. 

Donald S. Clark, 

Secretary.

[FR Doc. 04–22697 Filed 10–7–04; 8:45 am] 

BILLING CODE 6750–01–P

FEDERAL TRADE COMMISSION

[File No. 041 0164] 

Magellan Midstream Partners, L.P., et 

al.; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.