Conoco-Phillips Deal to Face Scrutiny

HOUSTONDespite a series of mergers in the oil and gas industry, federal trustbusters are not expected to put up significant hurdles to the proposed union of Bartlesville, Okla.-based Phillips Petroleum Co. and Conoco Inc.The $15.2 billion deal, if approved by the Federal Trade Commission (FTC), would vault two-mid-tier players to the leading ranks of the oil industry. The new company, to be named ConocoPhillips, would become the number-three U.S. oil company.The deal follows recent mergers between Exxon and Mobil, Chevron and Texaco, and BP Amoco and Arco that have significantly reshaped the industry and forced small players to consider their options, according to CBS News. Another deal is pending: Valero's proposed acquisition of Ultramar Diamond Shamrock Corp. That transaction is expected to close by year-end.In one recent case, the FTC approved Phillips' $7 billion merger with Tosco without any divestitures because the companies largely operated in different geographic regions.In other deals over the last two years, the FTC hasn't blocked any of the deals, instead requiring divestitures to preserve competition and protect consumers from higher prices at the gas pump.Expect more of the same in the latest deal. At the end of the day, "we'll see some kind of consent order," said Bob Bassman of Washington, D.C.-based Bassman, Mitchell & Alfano.Regulators will probably force Phillips and Conoco to sell off some convenience store and refining operations in the Rockies, the Gulf and Midwest states, according to observers. Phillips sells fuels under the brands Phillips 66, Circle K and 76. The combined company would have some 17,000 gas stations nationwide.The merger of Phillips and Conoco is expected to close sometime in mid-year 2002.