The Federal Trade Commission (FTC) decided by a 3-2 vote to abandon its administrative litigation against Western Refining, Inc. to enjoin the company’s US$1.4 billion takeover of rival Giant Industries, Inc. The decision follows the denial of the FTC’s motion for a preliminary injunction by the United States District Court for the District of New Mexico, and the subsequent dismissal of the appeal of that decision by the Federal Court of Appeals for the Tenth Circuit.
In April 2007 the FTC filed simultaneous complaints before an FTC Administrative Law Judge and the New Mexico District Court. According to these complaints, the merger of Western Refining and Giant Industries, if consummated, would substantially reduce competition and cause higher prices for the bulk supply of light petroleum products (including gasoline) in the Northern New Mexico market. The region allegedly affected by the merger comprised 11 New Mexico counties, including Albuquerque and Santa Fe, where gasoline prices historically have been among the highest in the US.
In a statement announcing that the FTC would voluntarily dismiss the administrative complaint, the FTC’s Commissioners noted that they strongly disagreed with the district court’s decision. The majority of the Commissioners concluded, however, that the agency’s resources are better spent pursuing other matters including other gasoline pricing matters. The majority also noted that facts discovered during preparations leading up to the preliminary injunction hearing revealed that there were opportunities for entry by new suppliers of bulk petroleum products in the affected region. Commissioners Harbour and Rosch dissented from the decision to dismiss the administrative complaint, arguing in a written statement that the district court had made significant factual and legal errors. Such errors, and “the paramount importance of ‘getting it right’ when gasoline refinery mergers are at issue,” they claimed, warranted a full trial on merits.