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Congressmen Say MidCon-Occidental Merger Could Mean Higher Gas Prices

January 14, 1986

CHICAGO (AP) _ A pending merger between Occidental Petroleum Corp. and MidCon Corp. could lead to higher natural gas prices unless the Federal Trade Commission takes action, two congressmen and an energy lobbying group say.

Rep. John Dingell, D-Mich., chairman of the House Energy Committee, and Rep. James Broyhill, R-N.C., the committee’s ranking Republican, have recommended in a letter to the FTC that the merger be allowed only if MidCon agrees to become a common carrier for the gas.

The move would allow MidCon customers to buy gas directly from producers and prevent a monopoly situation, the congressmen said Monday.

MidCon already has declined to participate in the Federal Energy Regulatory Commission’s Order 436, which says pipelines must be common carriers or give up all their direct sales to customers.

″The commission’s approval of vertical or horizontal mergers of interstate pipeline companies should be conditioned on the pipelines being operated as nondiscriminatory transporters under FERC’s Order 436A,″ the letter said.

″This is particularly true in the case of MidCon, which has been involved in a vertical merger with Occidental and a horizontal merger with United (Energy Resources),″ the lawmakers wrote.

Last month, MidCon completed the acquisition of United Energy Resources, a Houston-based pipeline company. The FTC raised antitrust objections to the merger, but allowed it to proceed while it was considering the case.

Completion of the United merger triggered a hostile bid for MidCon by WB Partners, a partnership of two Southern energy producers. Although the FTC has not commented on Occidental’s friendly acquisition of MidCon, the commission still has time to do so, according to Mike Woo, a Dingell aide.

″We’ve raised the issues,″ Woo said. ″Now it’s up to the FTC to handle it.″

Edwin S. Rothschild, assistant director of the Citizen.Labor Energy Coalition in Washington, D.C., charged that the acquisition would give Occidental a monopoly in Midwest gas markets in another letter to the FTC.

″According to Occidental’s own announcement, they intend to ship gas that is currently ‘shut-in’ in MidCon’s pipeline,″ Rothschild said. ″The reason that gas is shut-in is that it is priced higher than the market will bear.″

MidCon officials said they had no immediate comment on the letters.

Rothschild said his group believes that consumers will pay high prices for gas if the merger is allowed to go through and MidCon is not forced to comply with Order 436.

He said that MidCon filed an antitrust lawsuit against WB Partners charging that the group only wanted a pipeline to ship high-priced gas to Chicago consumers.

″MidCon made the same argument about WB Partners...that we’re making about the current merger,″ he said.

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