Senator San Nicolas wants FTC to look into Guam fuel market

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Congressman Michael San Nicolas said he will apprise the people of Guam as to the progress of HR 4262 as it moves through the U.S. House of Representatives.

The Senator says that he is confident that an FTC review will find that the market place is not as competitive as the FTC had intended.

Guam – Senator Mike San Nicolas has introduced a resolution that he hopes will spur the Federal Trade Commission to conduct a follow-up review of Guam’s fuel market

Resolution 215 asks the FTC to look at current trade practices and the market concentration of Guam’s wholesale and retail fuel market. Senator San Nicolas says that in 2000 the FTC ordered the divestiture of certain assets in Guam’s market after reviewing the merger of the Exxon and Mobile corporations. The FTC stated in a decision and order that that the merger would create a highly concentrated market on Guam that would be “subject to coordination”. San Nicolas points to the FTC order which states that the divestiture of some Guam assets was aimed at preventing the “lessening of competition in the importing, terminaling, wholesale and retail sale of fuel on Guam”

“Fast forward to today and we are asking the Federal Trade Commission to review that order and to review it in the context of the fuel market now and whether or not the intent of their order was fulfilled. Whether or not there is a competitive market place here. Whether or not the company that did acquire those assets is in fact competing with Mobil and also with shell and if the marketplace is competitive we will have to hang up our hat on that,” said San Nicolas.

The Senator says that he is confident that an FTC review will find that the market place is not as competitive as the FTC had intended. In addition, he says that if his resolution is adopted he is confident that the FTC will review the fuel market on Guam.

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Senator San Nicolas Seeking Federal Trade Commission Follow Up Review of Guam Fuel Market
Senator Michael San Nicolas introduced Resolution 215-34, requesting that the Federal Trade Commission conduct a review of the current trade practices and market concentration of Guam’s wholesale and retail fuel market.  It was in the year 2000 that the Federal Trade Commission in its review of the merger of the Exxon Corporation and Mobil Corporation, ordered the divestiture of certain assets in Northeast, Mid-Atlantic and Guam markets.  The merger at the time formed the third largest corporation in the world.
In Federal Trade Commission Decision and Order Docket No. C-3907 [Exhibit A], the FTC determined that the merger of Exxon Corp. and Mobil Corp. would create a highly concentrated market on Guam and that the market would be “subject to coordination.”  In ordering the divestiture of Guam assets, the aim of the Federal Trade Commission was to remedy the “lessening of competition in the importing, terminaling, wholesale and retail sale of fuel on Guam” [Exhibit A, Page 21].
Senator San Nicolas‘s resolution would seek a follow up review of the current fuel market conditions on Guam by the FTC, specifically as it applies to the FTC order relative to the merger.
“The Federal Trade Commission already looked at the highly concentrated market on Guam and determined it would be subject to coordination if assets were not divested.  We are seeking the Federal Trade Commission’s follow up review to determine if it’s divestiture order in 2000 accomplished its goal of a truly free and fair marketplace,” said Senator San Nicolas.
Gasoline on Guam often comes from Singapore and in an extensive study done by the Office of Senator San Nicolas last year, it was determined that in 2000 the difference between the price of Singapore oil and Guam fuel was $1.07 but that difference in price has ballooned to $2.28 as of January 2016.
“Over the past year my team and I have exhaustively researched the circumstances surrounding our gas prices.  After reviewing the findings and orders of the Federal Trade Commission relative to the Exxon Mobil merger, it is clear the intent was to have a more competitive fuel market.  Price behavior at the retail level does not reflect that and we need to have the FTC review whether or not post-merger behavior is consistent with the purpose for ordering the asset divestiture,” said Senator San Nicolas.