Pennsylvania Challenges ArcLight-Gulf Merger

HARRISBURG, Pa. (CN) - A plan to merge Pennsylvania's top gasoline companies - Gulf Oil and ArcLight - will "substantially lessen competition" in three markets, the state claims in a federal complaint.

The Dec. 28 complaint comes seven months after ArcLight, through two wholly owned subsidiaries Chelsea Petroleum Products I and Blue Hills Fuels, proposed to buy 100 percent of the partnership interests in Gulf from Cumberland Farms.

Gulf is a subsidiary of Cumberland Farms, a Delaware corporation headquartered in Framingham, Mass.

The Pennsylvania Attorney General's Office notes that ArcLight owns and operates 12 refined petroleum products storage facilities in Pennsylvania that total 9 million barrels of storage capacity through its Penn Products Terminal unit.

Citing "adverse effects on competition and consequent harm to the public interest that would result from ArcLight's acquisition of Gulf," the commonwealth now seeks an injunction.

The state says Arclight's acquisition of Gulf will affect three geographic markets: Altoona, Harrisburg and Scranton.

In addition to eliminating "actual, direct and substantial competition between both defendants," the merger increase the likelihood that the defendants would "unilaterally exercise market power in the relevant markets," and would enhance "the likelihood of collusion or coordinated interaction between or among the remaining firms in the relevant markets," according to the complaint.

Senior Deputy Attorney General Joseph Betsko signed the nine-page action.

ArcLight has not returned an email seeking comment.