Word: ftc
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Gulf needed Cities Service's valuable energy reserves to bolster its declining oil production. Soon after Gulf made its bid, though, several Wall Street analysts said that the company had acted hastily and paid too high a price. Then the FTC raised antitrust objections. The agency argued that if Gulf bought Cities Service, the combined company would have too large a share of the gasoline and kerosene jet fuel markets in some areas of the Southeast and would own too much (31%) of the Colonial Pipeline Co., which transports petroleum products from Texas to New Jersey...
Waidelich knew the deal was in trouble but remained optimistic that Gulf and the FTC could reach a settlement. Minutes before Gulf's stunning announcement on Aug. 6, Waidelich anxiously telephoned Gulf Chairman James Lee. "Can't you tell me what is going on?" Waidelich asked. After some hesitation, Lee admitted that Gulf was canceling the merger. "Jim, that's terrible," Waidelich gasped. "I know. I feel terrible too," replied...
Cities Service felt terrible enough to file a $3 billion lawsuit charging that Gulf was guilty of "intentional and malicious breaches of contract that are of a dimension unprecedented in the annals of American business history." Waidelich contends that Gulf used its dispute with the FTC as an excuse to back out of a deal that it no longer considered financially attractive. John Carley, the FTC'S general counsel, seemed to support that charge: "We were ready, willing and able to negotiate on any aspect of the proposed merger." But Gulf obviously was not. Said Chairman...
...during years of hearings before two FTC administrative law judges, the Government's case grew as soggy as the last Rice Krispies in a bowl of milk. Despite spending almost $6 million and compiling 40,000 pages of testimony with 2,900 supporting documents, the Government never proved that the cereal makers had reaped illegal monopoly profits. Last September FTC Judge Alvin Berman recommended that the suit be dismissed...
...decision was delayed, though, by an internal squabble among the FTC commissioners. Chairman James Miller, a Reagan appointee known for his pro-business views, was eager to drop the suit. Michael Pertschuk, a zealous consumer advocate who was commission chairman under President Carter, was just as adamant to keep it going. In December the two other commissioners, Patricia Bailey and David Clanton, both moderate Republicans, voted with Pertschuk to hear more arguments. By last week, however, Bailey and Clanton had switched sides. Clanton concluded that no cereal monopoly exists. Bailey decided that, monopoly or no, the proposed punishment was inappropriate...