FEDERAL TRADE COMMISSION DECISIONS FINDINGS, OPINIONS, AND ORDERS JANUARY 1, 2002 TO JUNE 30, 2002 PUBLISHED BY THE COMMISSION VOLUME 133 Compiled by The Office of the Secretary Ami Joy Rop, Editor MEMBERS OF THE FEDERAL TRADE COMMISSION DURING THE PERIOD JANUARY 1, 2002 TO JUNE 30, 2002 TIMOTHY J. MURIS, Chairman Took oath of office June 4, 2001. SHEILA F. ANTHONY, Commissioner Took oath of office September 30, 1997. MOZELLE W. THOMPSON, Commissioner Took oath of office December 17, 1997. ORSON SWINDLE, Commissioner Took oath of office December 18, 1997. THOMAS B. LEARY, Commissioner Took oath of office November 17, 1999. DONALD S. CLARK, Secretary Appointed August 28, 1988. CONTENTS _______________ Page Members of the Commission........................... II Table of Cases...................................... III Findings, Opinions, and Orders.......................... 1 Responses to Petitions to Quash ....................... 964 TABLE OF CASES _____________ Dkt. No. Name Page C-4036 A & S Pharmaceutical Corp. ..................501 D-9297 American Home Products ....................611 C-4051 Asahi Chemical Industry Co., Ltd. .............836 C-4043 Campbell Mithun LLC ......................702 C-4023 Chevron Corporation, et al. .....................1 C-4045 Deutsche Gelatine-Fabriken Stoess AG, et al. ....745 C-4032 Diageo PLC, et al. ..........................156 C-4047 Eli Lilly and Company ......................763 C-4050 FMC Corporation ..........................815 C-4071 INA-Holding Schaeffler KG, et al. .............379 C-4042 Interstate Bakeries Corporation ...............687 C-4027 Koninklijke Ahold NV, et al. .................121 C-4052 Kryton Coatings International, Inc..............857 C-4037 LNK International, Inc. ......................518 C-4035 Leiner Health Products, Inc. ..................485 C-4028 Nestle Holdings, Inc., et al. ...................236 C-4048 Obstetrics and Gynecology Medical Corporation of Napa Valley, et al...........................794 C-4041 Palm, Inc. ................................715 C-4039 Perrigo Company ..........................559 C-4038 Pharmaceutical Formulations, Inc. .............537 C-4040 Pletschke, Kris A., Individually and Doing Business as Raw Health...............................574 C-4046 Solvay S.A. ...............................879 C-4041 Technobrands, Inc., et al. ....................647 C-4034 Tru-Vantage International, L.L.C. .............299 C-4031 Valero Energy Corporation, et al. ..............416 PETITIONS TO QUASH 0223011 Loree & Lord .............................976 D-9171 Superior Court Trial Lawyers’ Association ......964 FEDERAL TRADE COMMISSION DECISIONS 1 VOLUME 133 Complaint IN THE MATTER OF CHEVRON CORPORATION, ET AL. CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATIONS OF SEC. 7 OF THE CLAYTON ACT AND SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-4023; File No. 0110011 Complaint, September 7, 2001--Decision, January 2, 2002 This consent order addresses the merger of Respondent Chevron Corporation and Respondent Texaco Inc., both large integrated oil companies engaged in the exploration for, and production of, oil and natural gas; the pipeline transportation of crude oil, natural gas, and natural gas liquids; the refining of crude oil into refined petroleum products, including gasoline, aviation fuel, and other light petroleum products; the transportation, terminaling, and marketing of gasoline and aviation fuel; and other related businesses. The order, among other things, requires the respondents to divest, to Shell Oil Company, all of Respondent Texaco’s interests in two joint ventures – Equilon Enterprises, LLC, jointly owned with Shell; and Motiva Enterprises, LLC, jointly owned with Shell and Saudi Refining, Inc. – that together own all of Texaco’s United States petroleum refining, marketing and transportation businesses, including (a) gasoline marketing in 22 States; (b) the marketing of California Air Resources Board (“CARB”) gasoline in California; ( c) refining and bulk supply of CARB gasoline for sale in California; (d) refining and bulk supply of gasoline and jet fuel in the Pacific Northwest; (e) the Explorer Pipeline and the bulk supply of certain reformulated gasoline (“RFG II”) into St. Louis; (f) terminaling of gasoline and other light products in ten metropolitan areas in five States; (g) the Equilon pipeline that transports crude oil from California’s San Joaquin Valley; and (h) the Equilon crude oil pipeline in the Eastern Gulf of Mexico. The order also requires the respondents to divest Texaco’s one-third interest in the Discovery Pipeline System and its interest in the Enterprise fractionating plant in Mont Belvieu, Texas, to acquirers approved by the Commission. In addition, the order requires the respondents to divest Texaco’s general aviation business in fourteen states to Avfuel Corporation. An accompanying Order to Hold Separate requires the respondents to hold separate and maintain certain assets pending divestiture. Participants For the Commission: Dennis F. Johnson, Renee S. Henning, Frank Lipson, Art Nolan, Peter A. Richman, Constance Salemi, Marc W. Schneider, W. Stephen Sockwell, Patricia V. Galvan, 2 FEDERAL TRADE COMMISSION DECISIONS VOLUME 133 Complaint Karen Harris, Phillip L. Broyles, Elizabeth A. Piotrowski, Michael E. Antalics, Naomi Licker, Daniel P. Ducore, M. Sean Royall, Louis Silvia, David W. Meyer and Daniel P. O’Brien. For the Respondents: Terry Calvani, Al Boro, John Grenfell, and Cecil Chung, Pillsbury Winthrop, and Marc Schildkraut, Timothy Boyle, and Lisa Jose Fales, Howrey, Simon, Arnold & White. COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and the Clayton Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission (“FTC” or “Commission”), having reason to believe that Respondent Chevron Corporation (“Chevron”) and Respondent Texaco Inc. (“Texaco”) have entered into an agreement and plan of merger whereby Chevron proposes to acquire all of the outstanding common stock of Texaco, that such agreement and plan of merger violates Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 45, and Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest, hereby issues its complaint, stating its charges as follows: I. RESPONDENTS Chevron Corporation 1. Respondent Chevron is a corporation organized, existing and doing business under and by virtue of the laws of the state of Delaware, with its office and principal place of business located at 575 Market Street, San Francisco, CA 94105. 2. Respondent Chevron is, and at all times relevant herein has been, a diversified energy company engaged, either directly or through affiliates, in the exploration for, and production of, oil and natural gas; the pipeline transportation of crude oil, natural gas, and natural gas liquids; the refining of crude oil into FEDERAL TRADE COMMISSION DECISIONS 3 VOLUME 133 Complaint refined petroleum products, including gasoline, aviation fuel, and other light petroleum products; the transportation, terminaling, and marketing of gasoline, diesel fuel, and aviation fuel; and other related businesses. 3. Respondent Chevron owns approximately 26% of Dynegy Inc. (“Dynegy”). Dynegy is engaged in the gathering, processing, fractionation, transmission, terminaling, storage, and marketing of natural gas and natural gas liquids. Chevron has a long-term strategic alliance with Dynegy for the marketing of Chevron’s natural gas and natural gas liquids, and the supply of natural gas and natural gas liquids to Chevron’s refineries in the lower 48 states of the United States. Chevron has three positions on Dynegy’s Board of Directors. This relationship gives Chevron access to information concerning Dynegy’s business and allows Chevron to participate in Dynegy’s business decisions. 4. Respondent Chevron is, and at all times relevant herein has been, engaged in commerce as “commerce” is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. § 12, and is a corporation whose business is in or affecting commerce as “commerce” is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44. Texaco Inc. 5. Respondent Texaco is a corporation organized, existing and doing business under and by virtue of the laws of the state of Delaware, with its office and principal place of business located at 2000 Westchester Ave., White Plains, NY 10650. 6. Respondent Texaco is, and at all times relevant herein has been, a diversified energy company engaged, either directly or through affiliates, in the exploration for, and production of, oil and natural gas; the pipeline transportation of crude oil, natural gas and natural gas liquids; the refining of crude oil into refined petroleum products, including gasoline, aviation fuel, and other light petroleum products; the transportation, 4 FEDERAL TRADE COMMISSION DECISIONS VOLUME 133 Complaint terminaling, and marketing of gasoline, diesel fuel, and aviation fuel; and other related businesses. 7. Respondent Texaco is, and at all times relevant herein has been, engaged in commerce as “commerce” is defined in Section 1 of the Clayton Act, as amended, 15 U.S.C. § 12, and is a corporation whose business is in or affecting commerce as “commerce” is defined in Section 4 of the Federal Trade Commission Act, as amended, 15 U.S.C. § 44. 8. In 1998, Texaco contributed its U.S. petroleum refining, marketing and transportation