Chevron Corporation

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IN THE MATTER OF CHEVRON CORPORATION, ET AL.

MODIFYING ORDER IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT AND SEC. 7 OF THE CLAYTON ACT Docket 3147. Cunsent Order, Oct. 1984-Modi(ying Order, March, 1985 After a "Request For Termination of Hold Separate Agreement" (Request) filed by a respondent in a divestiture order isued on October 24, 1984, had been placed on the public record for ten days and no comments had been received, the Commission reviewed the Request and concluded that the public interest warranted modifying Paragraph II(c) of the Order, so that the Agreement To Hold Separate, attached to the Order as Appendix 1, "shall continue in effect until such time as Gulfs stock interest in Colonial Pipeline Company has been divested." The Commission held that the Hold Separate Agreement had accomplished its primary objectives with the divestitures of Gulfs refining and marketing assets in the Southeast and of its interest in Colonial Pipeline Company, and the potentia! harm resulting from the cost" of continuing the Agreement outweighed any further need to maintain it in eHect.

ORDER MODIFYING DECISION AND ORDER ISSUED OCTOBER 24, 1984 On February 21, 1985, respondent Chevron Corporation ("Chev- ) filed a "Request For Termination Of Hold Separate Agreement" 'Request" ). Since Paragraph II(c) ofthe decision and order issued on ctober 24, 1984 ("the order ) incorporates the Agreement To Hold ,parate, which is attached to the order as Appendix I, the Request effect, seeks modification of the order to terminate the Hold Sepa- ;e Agreement. The Request was on the public record for ten days i no comments were received.

aragraph II(e) of the order provides that the Agreement to Hold arate "shall continue in effect until such time as the Schedule A perties have been divested. . . . " As the Request notes, the Hold ,rate Agreement is not limited to the assets that Chevron is reed to divest pursuant to the order but is applicable to all of Gulf's ,stic oil and gas assets and operations. Chevron has now submitivestiture applications covering all of the assets it is required to t and the Commission has approved the divestitures with the tion of the divestiture of 51 percent of Gulfs interest in the West Pipeline Company. The latter divestiture proposal is awaiting \ission action.

r reviewing respondent' s Request, the Commission has conclud- ; the public interest warrants reopening the order and modifyragraph II(c) so that the Hold Separate Agreement will CHEVRON CORP., ET AL. 44:: 228 Modifying Ordey terminate on the consummation of the divestiture of Gulfs interest in Colonial Pipeline Company. The Commission has concluded that the potential harm resulting from the costs of continuing the Hold Separate Agreement outweighs any further need to maintain it in effect. The Commission is of the opinion that, with the divestitures of Gulfs refining and marketing assets in the Southeast and of its interest in Colonial Pipeline Company, the Hold Separate Agreement has accomplished its primary objectives. On the other hand, Chevron has demonstrated that the continuation of the Hold Separate Agreement which is applicable to all of Gulfs domestic oil and gas assets and operations, is imposing considerable costs on Chevron and Gulf. These costs have been estimated to exceed $1 milion a day and are being incurred because the Hold Separate Agreement prevents the realization of effciencies that are expected to flow from integrating the operations of the two companies. Such effciencies include those that can be achieved in combining the Chevron and Gulf work forces; increasing operating effciencies and eliminating the duplication of functions resulting from overlapping operations in various areas; and combining desirable aspects of the technologies ofthe two companies. Chevron has also demonstrated that the Hold Separate Agreement is contributing to the loss of a considerable number of skilled employees who are diffcult to replace and is adversely affecting the morale and productivity of Gulf employees.

Accordingly, it is ordered that this matter be, and it hereby is reopened, and that Paragraph lI(c) of the Commission s order issued on October 24, 1984, be, and it hereby is, modified to read as follows: (c) The Agreement to Hold Separate, attached hereto and made a part hereof as Appendix shall continue in effect until such time as Gulfs stock interest in Colonial Pipeline Company has been divested, and Chevron and Gulfshall comply with all terms of said Agreement. Commissioner Calvani voted in the negative. "'"u FEDERAL TRADE COMMISSION DECISIONS Co-fuplaiht 105 F.