By Natalie DeCoste
The Federal Trade Commission (FTC) has ordered 7-Eleven, Inc. and Marathon Petroleum Corporation to divest hundreds of stores.
7-Eleven, Inc. and Marathon Petroleum Corporation agreed to divest hundreds of stores used to sell gasoline and diesel fuel after the FTC found that 7-Eleven’s acquisition of Marathon Speedway’s subsidiary violated federal antitrust laws. The FTC found that 7-Eleven violated Section 7 of the Clayton Act and Section 5 of the FTC Act.
7-Eleven acquired the Speedway stores from Marathon Petroleum on May 14, 2021. The company did so over the objection of the FTC. The FTC’s two Republicans, Noah Phillips and Christine Wilson, supported a settlement negotiated by the agency and the company that would have seen 7-Eleven sell off 239 Speedway locations. Other members, Chopra and Slaughter, were not satisfied with the settlement and requested that 7-Eleven delay closing its transaction.
In turn, 7-Eleven declined to delay closing the deal, alleging it had already delayed closing four times to accommodate the FTC. The company closed the deal despite the risk of an FTC antitrust suit. The $21 billion deal involved some 3,800 stores in 36 states. The stores at issue in the dispute sell fuel in 293 local markets across 20 states.
The complaint against 7-Eleven alleged that because markets for retail gasoline and retail diesel fuel are highly localized, and consumers have no economic or practical alternatives to the retail sale of gasoline or diesel fuel. Therefore, the acquisition would hurt competition in local markets. Specifically, in 140 of those markets, competition for the retail sale of gas will be harmed; in 29 markets, competition for the retail sale of diesel will be harmed; and in 124 markets, competition for the retail sale of both types of products will be harmed.
Under the terms of the divestiture, 7-Eleven and Marathon must divest 124 retail fuel outlets to Anabi Oil. These retail fuel outlets are comprised of 123 Speedway outlets and one 7-Eleven outlet. The company must also divest 106 retail fuel outlets to Cross America Partners. These retail fuel outlets are comprised of 105 Speedway outlets and one 7-Eleven outlet. Finally, the company must divest 63 Speedway retail fuel outlets to Jacksons Food Stores.
“In addition, to remove impediments that could prevent the buyers from competing vigorously in these markets, the proposed order also prohibits 7-Eleven from enforcing any noncompete provisions as to any franchisees or employees working at or doing business with the divested assets. The proposed order also requires 7-Eleven, Inc. and Marathon, for a period of five years, to obtain prior Commission approval before purchasing any of the divested outlets,” read the FTC’s press release about the order.
For 10 years, the companies must provide prior notice of future acquisitions of the divested assets or any other assets identified by the FTC within the local markets at issue, plus an additional three markets. The FTC is concerned that acquisitions by the company in these markets could raise the same competitive concerns but may fall below the Hart-Scott-Rodino Act premerger notification thresholds, which requires notifications of acquisitions when they impact U.S. commerce or the companies have a certain value for their total assets.
