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States may probe Exxon deal
December 1, 1998: 8:06 p.m. ET

At least 12 state attorneys general offices are talking to begin merger inquiry
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NEW YORK (CNNfn) - The ink is barely dry on the merger agreement between oil giants Exxon Corp. and Mobil Corp. but already at least a dozen state attorneys general offices are holding talks to determine which jurisdictions will participate in a formal inquiry to address antitrust concerns.
     That an antitrust inquiry will, in fact, be launched in the coming weeks, a spokesperson from one state attorney general's office said, is a foregone conclusion.
     "It's fair to say that a number of states are now considering an inquiry into the merger," the spokesperson, who asked not to be named, said.
     A spokesperson from another state's attorney general's office confirmed that the merger was on the radar screen.
     "I think it would be fair to say we are going to take a look at this in coordination with other states' attorneys general offices and the Department of Justice,'' the spokesperson, who also requested anonymity, said.
     However, Government antitrust officials tell CNN the Federal Trade Commission rather than the Justice Department will likely conduct the expected federal review into potential antitrust problems posed by the proposed merger.
     Antitrust examinations involving the oil and gas industries historically have been steered to the FTC because of the technical expertise that agency has developed in analyzing competition in the petroleum industry.
     The National Association of Attorneys General (NAAG) - the umbrella organization for all 50 state attorneys general offices and those in the District of Columbia and Puerto Rico - has an ongoing multi-state working group set up to review merger activity to ensure that corporate combinations do not interfere with free market competition - and that they don't short change consumers.
     The $79 billion marriage of Mobil (MOB) and Exxon (XON), confirmed Tuesday morning, has been a hot button topic among the states for months, sources say, despite the show-stealing antitrust investigation into Microsoft Corp.
     The same sources said the NAAG working group is gathering momentum to determine the level of interest in pursing a formal inquiry into the merger. It's still too early to say how many states might climb on board, but a more solid estimate of the financial support available to pursue such an inquiry and the number of states participating will become clearer next week, they said.
     "The states will choose a lead state, maybe where the corporations are based, then there's a sort of meeting of the minds to determine who will contribute what staff and monetary assistance," one source said. "Part of that [funding] is to retain experts in the field to take a closer look at the deal. Then there's the request for information from the companies."
     The NAAG group is expected to closely review the distribution networks of the oil companies, the refinery capabilities of both companies, the level of competition in individual markets, and the companies' collective market share of commercial and retail services.
     Prices at the pump will also be a hot button issue, according to sources.
     "There may be issues that arise to antitrust concerns in certain states, whereas there may not be any concerns in other states," a source said.
     If Mobil and Exxon don't cough up the answers to the states' satisfaction, the source said, the states and Justice Department, would most likely file a complaint to block the merger.
     But John Lichtblau, chairman of the New York-based Petroleum Industry Research Foundation Inc., said Exxon and Mobil are no doubt aware of any antitrust stumbling blocks that could arise on their trip to the altar.
     "These companies have such experienced legal advisors and if they thought it couldn't go through they wouldn't have pursued it," he said. "They may have to divest some refineries or gasoline marketing facilities where both companies have a large share of the market, but I don't think it'll block it from happening."
     Specifically, Lichtblau said Mobil and Exxon both have a sizable share of the oil-refining market in Texas and Louisiana.
     The Texas Attorney General's office is refusing to comment on its role, if any, in what some describe as a pending investigation.
     He acknowledged, too, that a deal of this size will likely be reviewed at a series of Congressional hearings. Back to top


National Association of Attorneys General

Federal Trade Commission



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