Petroleum Mergers and Competition in the Northeast United States

Sunoco’s 2004 acquisition of El Paso’s, New Jersey refinery and Valero’s 2005 acquisition of Premcor’s Delaware refinery significantly consolidated refinery control in the U.S. Northeast. The Federal Trade Commission investigated both transactions but challenged neither. We examine the FTC’s enforcement rationale and test whether these mergers were associated with post-merger price increases in either gasoline or diesel at retail and wholesale levels. Our findings indicate that the transactions were largely competitively neutral. There was some indication that some unbranded rack prices may have increased after the mergers, but this result was not robust across controls or assumptions. In some other instances, prices in merger affected areas may have fallen relative to prices elsewhere after the transactions.