[Federal Register Volume 87, Number 111 (Thursday, June 9, 2022)]
[Notices]
[Pages 35212-35214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-12430]


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FEDERAL TRADE COMMISSION

[File No. 211 0144]


Buckeye/Magellan; Analysis of Agreement Containing Consent Orders 
To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair methods of competition. 
The attached Analysis of Proposed Consent Orders to Aid Public Comment 
describes both the allegations in the complaint and the terms of the 
consent orders--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before July 11, 2022.

ADDRESSES: Interested parties may file comments online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write: ``Buckeye/
Magellan; File No. 211 0144'' on your comment and file your comment 
online at https://www.regulations.gov by following the instructions on 
the web-based form. If you prefer to file your comment on paper, please 
mail your comment to the following address: Federal Trade Commission, 
Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 
(Annex D), Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Terry Thomas (202-326-3218), Bureau of 
Competition, Federal Trade Commission, 400 7th Street SW, Washington, 
DC 20024.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 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 of Agreement Containing Consent Orders 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 website at 
this web address: https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before July 11, 2022. 
Write ``Buckeye/Magellan; File No. 211 0144'' on your comment. Your 
comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the https://www.regulations.gov website.
    Due to protective actions in response to the COVID-19 pandemic and 
the agency's heightened security screening, postal mail addressed to 
the Commission will be delayed. We strongly encourage you to submit 
your comments online through the https://www.regulations.gov website.
    If you prefer to file your comment on paper, write ``Buckeye/
Magellan; File No. 211 0144'' on your comment and on the envelope, and 
mail your comment to the following address: Federal Trade Commission, 
Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 
(Annex D), Washington, DC 20580.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include sensitive 
personal information, such as your or anyone else's Social Security 
number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. You are also 
solely responsible for making sure your comment does not include 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 
16 CFR 4.10(a)(2)--including competitively sensitive

[[Page 35213]]

information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual and legal basis for the request and 
must identify the specific portions of the comment to be withheld from 
the public record. See FTC Rule 4.9(c). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on https://www.regulations.gov--as legally required by FTC 
Rule 4.9(b)--we cannot redact or remove your comment from that website, 
unless you submit a confidentiality request that meets the requirements 
for such treatment under FTC Rule 4.9(c), and the General Counsel 
grants that request.
    Visit the FTC website at https://www.ftc.gov to read this document 
and the news release describing this matter. The FTC Act and other laws 
the Commission administers permit the collection of public comments to 
consider and use in this proceeding, as appropriate. The Commission 
will consider all timely and responsive public comments it receives on 
or before July 11, 2022. For information on the Commission's privacy 
policy, including routine uses permitted by the Privacy Act, see 
https://www.ftc.gov/site-information/privacy-policy.

Analysis of Agreement Containing Consent Orders To Aid Public Comment

I. Introduction

    The Federal Trade Commission (``Commission'') has accepted for 
public comment, subject to final approval, an Agreement Containing 
Consent Order (``Consent Agreement'') from IFM Global Infrastructure 
Fund, Buckeye Partners, L.P. (``Buckeye'') and Magellan Midstream 
Partners, L.P. (``Magellan'') (collectively, the ``Respondents''). The 
Consent Agreement is designed to remedy the anticompetitive effects 
that likely would result from Buckeye's proposed acquisition from 
Magellan of 26 light petroleum product (``LPP'') terminals, located 
primarily in the southeastern United States.
    The Commission's Complaint alleges that the acquisition, if 
consummated, 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, by substantially lessening competition for 
terminaling services for all LPPs, and terminaling services 
specifically for gasoline, in three relevant geographic markets: North 
Augusta, South Carolina; Spartanburg, South Carolina; and Montgomery, 
Alabama.
    Petroleum product terminals are critical to the efficient 
distribution of LPPs. Terminals generally consist of storage tanks that 
load fuel into tanker trucks for further delivery. Terminals receive 
their supply from pipelines or water vessels. Wholesale petroleum 
suppliers move LPPs from the terminals to retail locations and end-use 
customers. Terminaling services include the cluster of services related 
to the off-loading, temporary storage, and dispensing of LPPs into 
trucks.
    Under the terms of the proposed Decision and Order (``Order'') 
included in the Consent Agreement, Buckeye must divest all of 
Magellan's terminals located in North Augusta, South Carolina; 
Spartanburg, South Carolina; and Montgomery, Alabama, to U.S. Venture, 
Inc. (``U.S. Venture''), a financially sound buyer with a record of 
operating successful LPP terminals in other locations. The divestitures 
will effectively restore an independent terminal operator in each 
relevant geographic market and will thereby preserve competition in 
each relevant market. Further, the Commission has issued, and 
Respondents have agreed to comply with, an Order to Maintain Assets 
that requires Respondents to operate and maintain the divestiture 
assets in the normal course of business through the date U.S. Venture 
acquires the divested assets.
    The Commission has placed the Consent Agreement on the public 
record for 30 days to solicit comments from interested persons. 
Comments received during this period will become part of the public 
record. After 30 days, the Commission will review the comments received 
and decide whether it should withdraw, modify, or make the proposed 
Order final.

II. The Respondents

    Buckeye provides midstream logistics solutions, primarily 
consisting of pipeline transportation, storage, and throughput of LPPs, 
which include gasoline and distillates. Buckeye is headquartered in 
Houston, Texas. Buckeye owns over 115 LLP terminals which are located 
primarily in the Northeast and Midwest. IFM Global Infrastructure Fund 
is the ultimate parent entity of Buckeye.
    Magellan is a publicly traded partnership that transports, stores, 
processes, and distributes LLPs and crude oil. Magellan operates a 
pipeline system and terminals in the central United States as well as 
terminals in the southeastern United States. Magellan is headquartered 
in Tulsa, Oklahoma. In 2020, Magellan's revenues from transportation 
and terminals were $1.8 billion.

III. The Proposed Acquisition

    Pursuant to an Equity Purchase Agreement dated June 9, 2021, 
Buckeye will acquire 26 LLP terminals from Magellan for approximately 
$435 million (the ``Acquisition''). The terminals are located in 
Alabama, Georgia, Missouri, North Carolina, South Carolina, Tennessee, 
and Virginia.

IV. The Relevant Markets

    The Commission's Complaint alleges that the relevant service 
markets in which to analyze the Acquisition is terminaling services for 
LPPs and terminaling services for gasoline specifically. Refiners, 
independent traders, and fuel marketers require a means to receive and 
store bulk quantities of LLPs and to deliver these products into tanker 
trucks, whether for their own use or for their customers. No cost-
effective alternatives to terminaling services serve these functions. 
To provide terminaling services for gasoline, terminals generally must 
have specialized equipment, including vapor recovery units, tanks with 
internal floating roofs, and the ability to blend gasoline with 
ethanol. While gasoline-capable storage tanks may also handle 
distillates, the reverse is generally not possible without added 
expense, due to the more stringent regulatory requirements for the 
storage and handling of gasoline. Because storing and handling gasoline 
requires different tanks and other infrastructure, a narrower 
terminaling market also exists for terminaling services specifically 
for gasoline.
    The Commission's Complaint alleges three relevant geographic 
markets: North Augusta, South Carolina; Spartanburg, South Carolina; 
and Montgomery, Alabama. The area that a particular terminal can serve 
is limited by several factors, including the density of retail outlets 
served from the terminal, trucking costs relating to labor and fuel, 
driving times and distances, loading and waiting times at the terminal, 
and the relative price differences of LPPs offered at alternative 
terminals.

[[Page 35214]]

    The Acquisition would likely substantially lessen competition in 
each local market. In North Augusta, Buckeye and Magellan are two of 
only three firms that offer terminaling services for LPPs and for 
gasoline. The markets are highly concentrated with the significant 
increase in concentration giving rise to a presumption of enhanced 
market power post-Acquisition. In Spartanburg, as measured by LPP 
capacity, Buckeye owns the largest terminal and Magellan owns the 
second largest. The Acquisition would result in highly concentrated 
markets for LPP and gasoline terminaling services with a change in 
concentration giving rise to a presumption of enhanced market power. In 
Montgomery, the Acquisition would reduce the number of terminal service 
operators from six to five, resulting in a moderately concentrated 
market post-Acquisition, and would also reduce the number of gasoline 
terminal operators from five to four, resulting in a highly 
concentrated market post-Acquisition. Moreover, Buckeye and Magellan 
are two of few independent gasoline terminal operators in Montgomery, 
who have little or no refining or marketing activities that can be 
supported by their terminal operations. The Acquisition would leave as 
few as two independent gasoline terminal operators in Montgomery and 
limit options for third parties to access independent terminaling 
services providers in that market.
    Entry into each relevant market would not be timely, likely, or 
sufficient to deter or counteract the anticompetitive effects arising 
from the Acquisition. Barriers to entry are significant and include 
high sunk costs associated with the construction of a new terminal and 
the time required to design, build, and permit a new facility.

V. The Proposed Order and the Order To Maintain Assets

    The proposed Order and the Order to Maintain Assets would remedy 
the Acquisition's likely anticompetitive effects alleged in the 
Commission's Complaint by requiring Buckeye to divest the Magellan 
terminals and all associated assets (the ``Terminal Divestiture 
Assets'') in North Augusta, Spartanburg, and Montgomery to U.S. 
Venture. The proposed Order ensures that U.S. Venture or any other 
acquirer can operate the terminals in a manner equivalent in all 
material respects to the manner in which Magellan operated those 
businesses prior to the Acquisition.
    U.S. Venture is a privately held company that was founded in 1951 
and currently has a number of divisions, including U.S. Oil. U.S. Oil 
will be responsible for operating the divested terminals. U.S. Oil owns 
and operates 26 terminals in Iowa, Michigan, Indiana, Wisconsin, and 
Texas serving retail customers at 11 locations. U.S. Oil does not have 
any refined products terminals in the southeastern United States.
    The proposed Order requires Buckeye to divest the Terminal 
Divestiture Assets no later than 10 days after Buckeye and Magellan 
consummate the Acquisition.
    The proposed Order and the Order to Maintain Assets contain 
additional provisions designed to ensure the effectiveness of the 
relief. Both the proposed Order and the Order to Maintain Assets 
require Respondents to maintain the Terminal Divestiture Assets' full 
economic viability, marketability, and competitiveness until the 
divestitures are completed and to help facilitate the transfer of the 
Terminal Divestiture Assets to U.S. Venture.
    In addition to requiring divestiture of the Terminal Divestiture 
Assets, the proposed Order requires Buckeye to seek prior approval from 
the Commission before acquiring any LPP terminal (including the 
divested terminals) within a 60-mile radius of the Terminal Divestiture 
Assets because an acquisition in close proximity to divested assets 
likely would raise the same competitive concerns as the Acquisition and 
may fall below the Hart-Scott-Rodino Act premerger notification 
thresholds. The proposed Order further requires U.S. Venture to obtain 
prior approval from the Commission for a period of three years before 
transferring any of the divested assets to any buyer, and for a period 
of seven additional years to any buyer with an interest in any LLP 
terminal in any of the three relevant geographic markets.
    Finally, the proposed Order appoints The Claro Group as an 
independent third-party monitor to oversee the Respondents' compliance 
with the requirements of the proposed Order. The Claro Group has 
previous experience serving as a monitor for the Commission in matters 
relating to natural gas pipelines and retail gasoline outlets.
    The purpose of this analysis is to facilitate public comment on the 
proposed Order, and the Commission does not intend this analysis to 
constitute an official interpretation of the proposed Order or to 
modify its terms in any way.

    By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022-12430 Filed 6-8-22; 8:45 am]
BILLING CODE 6750-01-P