Exxon, Mobil Address EU Concerns Regarding Merger
Friday, September 03, 1999
Exxon Corp. and Mobil Corp. have moved to address European Commission concerns about their merger in the natural gas sector in Germany and over an existing European joint venture between Mobil and BP Amoco Plc, a Commission spokesman said.
The Commission was also no longer concerned that the $80 billion merger and a rival deal between BP Amoco and Atlantic Richfield would result in excessive consolidation in oil exploration, the spokesman added, paving the way for regulatory approval in the European Union.
The news that the Commission has dropped fears the two oil mergers could significantly reduce competition in the upstream sector comes as no surprise after the EU executive last month failed to detail its objections formally in the BP Amoco/ARCO deal - a clear sign the second deal posed no problems at all. This also logically meant Exxon/Mobil was cleared of the upstream concerns.
Regarding the more specific problems caused by the combination of Exxon and Mobil in German natural gas and the future of a downstream venture between Mobil and BP Amoco, the companies have made concessions, a Commission source said, but cautioned that negotiations were not over, particularly concerning the period of time to be given to the companies to fulfil their commitments. Merger conditions often include asset sell-offs and BP Amoco wants to buy out Mobil's 30 percent stake in the venture.
"We still have time. They still have two to three weeks to offer commitments," the source said.
A committee of merger experts from the EU's national competition authorities will meet in mid-September to discuss a Commission draft decision, which is set to be finalized Sept. 29.
The Commission started a detailed investigation into the proposed merger between Exxon and Mobil in June citing concerns that only a cluster of super oil majors would have the capacity to search and develop unexplored oil reserves.
It also expressed concerns at the level of onshore production and transmission of gas in Germany, the impact on European petrol and lubricants supply due to the BP Amoco/Mobil venture and to a separate joint venture between Exxon and Shell in the manufacture of oil additives.