FTC chair says 7-Eleven owner’s $ 21 billion speedway contract may be illegal

The acting chairman of the Federal Trade Commission said the owner of the 7-Eleven convenience store chain, buying $ 21 billion in Speedway gas stations, could violate competition law.

Seven & i Holdings Japanese retail giant he agreed to buy the business – Marathon Petroleum has about 3,900 gas stations and convenience stores – in a cash deal last August, which sought to strengthen its position in the U.S. market.

The link would push Seven & I to the U.S. in 2017 after buying parts of the Sunoco shopping store and gas station business after a $ 3.3 million purchase. Adding speedway would also expand the U.S. shopping store market from 5.9 percent to 8.5 percent. percentages, pushing ahead of its nearest opponent, Canada’s Alimentation Couche-Tard.

When it was delivered on Friday, FTC President Rebecca Kelly Slaughter and FTC Democrat committee commissioner Rohit Chopra said they were “extremely concerned” that Seven & I had closed the deal that day despite ongoing investigations by the regulator. and said they have “reason to believe that this transaction is illegal.”

“In many local markets, the transaction is a monopoly merger or the number of competitors is reduced from three to two,” they said in a statement.

Although the antitrust regulator wasted “significant resources” investigating the transaction, no agreement had yet been reached with the companies involved to resolve its concerns, they said.

“The decision to close the Seven and Marathon under these circumstances is very unusual, and we are very concerned,” Slaughter and Chopra said.

Seven & ik said Friday that it had reached an agreement with FTC staff in late April, pledging to divest 293 stores. The agreement has not yet been signed by FTC commissioners.

“If approved, this settlement will address all of the competitiveness concerns mentioned by the commissioners in their statement,” the company said. “We are confident that the committee will approve a short-term negotiated agreement.”

The Speedway deal was over previous lectures It broke between Seven & i and the Marathon due to a lack of agreement on prices. The company initially had to pay $ 22 billion for Speedway operations, but five months later agreed to a small 4.5 percent discount.

Last year’s Marathon said the deal would generate about $ 16.5 billion in post-tax profits, which would be used to repay the debt and return the funds to shareholders.

Marathon reached an agreement after being pressured by activist investor Elliott Management, which in 2019 launched a campaign to bargain the company to address “chronic underperformance” in its businesses. He had already announced plans to turn Speedway into another entity.

Marathon did not immediately respond to a request for comment on the statement.

The FTC will continue to investigate the transaction “to determine the appropriate way to address the damage to competitiveness,” Slaughter and Chopra said in their statement. “The parties have closed the transaction at their own risk.”