BP Amoco-Arco Merger Challenged
SAN FRANCISCO (AP) _ Following the federal government’s lead, the state governments of California, Oregon and Washington went to federal court Friday to try to stop BP Amoco’s $30 billion acquisition of fellow oil giant Atlantic Richfield Co.
The three states filed a suit that mirrored the argument offered Friday in a suit by the Federal Trade Commission: The new company would dominate Alaska oil production and control West Coast supplies, with the power to raise prices.
The merger was to have been completed Monday, but the companies have agreed to wait until March 10, when a federal judge is scheduled to consider the FTC’s request for a preliminary injunction. The states’ suit may be consolidated with the FTC case.
London-based BP Amoco agreed last March to acquire Los Angeles-based Atlantic Richfield, known as Arco, a purchase that would create the world’s second largest non-government oil company, behind Exxon Mobil. BP Amoco and Arco account for about 70 percent of Alaska crude oil production.
Opponents of the merger focus on its effects on Alaska oil supplies to West Coast refiners.
``The merger as presently proposed would result in a harmful monopoly of Alaska North Slope crude oil supplied to California refiners,″ California Attorney General Bill Lockyer said in a written statement.
He said Californians are already suffering from a lack of competition among major refiners, and the new merger could cause ``a major loss of competition and greater squeeze of the West Coast.″
The two companies say their combination will not damage competition and deny the existence of a specialized West Coast market for Alaska crude oil. They contend the international oil market would compensate for any effect on the price of Alaska oil.
BP Amoco has agreed with the state of Alaska to sell off holdings that would reduce the merged company’s share of Alaskan production from 70 to 55 percent.