By Edward L. Puzzo, J.D.
The parent of the 7-Eleven has agreed to certain conditions including divestitures in order to settle FTC charges that its proposed $3.3 billion acquisition of approximately 1,100 retail fuel outlets from Sunoco would violate federal antitrust law, the FTC has announced (In the Matter of Seven & i Holdings Co., Ltd., FTC Dkt. C-4641, File No. 171 0126).
On April 6, 2017, Seven & i Holdings Co. Ltd., the Japanese parent of 7-Eleven Inc., announced its intention to acquire 1110 convenience stores from Sunoco for $3.3 billion. Both 7-Eleven and Sunoco operate convenience stores and retail fuel outlets. 7-Eleven’s U.S. network consists of approximately 8,500 stores located in 35 states. More than 1,000 locations are company-operated, making 7-Eleven one of the largest convenience store operators in terms of company-owned stores. Sunoco operates over 1,300 locations in the United States.
The FTC challenged the proposed acquisition, charging that the proposed acquisition would harm competition in 76 local markets across 20 metropolitan statistical areas (MSAs), creating a monopoly in 18 local markets, a reduction in competitors from three to two in 39 local markets, and a reduction in competitors from four to three in 19 other local markets.
The FTC noted that retail fuel stations compete on price, convenience store format, product offerings, and location, and they pay close attention to nearby competitors. Since few consumers are willing to travel great distances to purchase fuel, the markets for retail fuel are localized, generally ranging from a few blocks to a few miles. In some situations, a single station competes in more than one of these small, local markets. Without a remedy, the FTC maintained, the acquisition would increase the likelihood either that 7-Eleven could unilaterally raise prices or that the small number of remaining competitors could increase prices by coordinating their actions.
Under the terms of the consent agreement 7-Eleven is required to sell 26 retail fuel outlets that it owns to Sunoco, and Sunoco is required to retain 33 fuel outlets that 7-Eleven otherwise would have acquired. Sunoco intends to convert the acquired or retained stations from company-operated sites to commission agent sites. Sunoco will have full control over fuel pricing and supply at all of these locations. The divestitures must be completed no later than 90 days after the closing of 7-Eleven’s acquisition of Sunoco.
Attorneys: Eric Olson for FTC. Corey W. Roush (Akin, Gump, Strauss, Hauer & Feld LLP) for Seven & i Holdings Co., Ltd. and 7-Eleven, Inc. William R. Vigdor (Vinson & Elkins LLP) for Sunoco LP.
Companies: Seven & i Holdings Co. Ltd; 7-Eleven Inc.; Sunoco LP
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