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FOR IMMEDIATE RELEASE
September 07, 2001
States, FTC allow Chevron/Texaco Merger to Proceed


Seattle - Sept. 7, 2001 - Washington state, along with 11 other states and the Federal Trade Commission (FTC), today filed settlement papers that clear the way for the merger of Chevron Corp. and Texaco Inc.

Today's settlement was reached after the companies made major concessions, including agreeing to sell all of Texaco's refining and marketing assets in the United States to another buyer, possibly Shell.

State regulators initially were concerned the merger would give the new entity, which will be known as ChevronTexaco Corp., too much market power, which would then reduce competition in the marketplace and lead to higher consumer prices for gasoline.

"Because of these concessions, we feel confident that retail and wholesale gasoline markets in Washington will remain competitive," said Washington Attorney General Christine Gregoire. "We believe this agreement protects Washington consumers."

According to market surveys, Chevron supplies approximately 20 percent of the retail gasoline market in the region. A joint venture known as Equilon, which belongs to Texaco and Shell, supplies 24 percent of the regional gasoline market.

If Texaco wasn't forced to sell its assets as part of the merger, regulators believe, the new, merged company would control as much as 44 percent of the Washington gasoline market.

Under the terms of the settlement, Texaco Inc. must divest itself of all interest in Equilon and must also relinquish its right to use the Texaco brand name through 2003. This, regulators believe, will prevent the new ChevronTexaco Corp. from taking over the market and will also allow the buyer of Texaco's assets to build its own brand.

Independent gasoline wholesalers and retailers, however, will be allowed to continue using the Texaco brand until they can switch, according to the settlement.

Also in the settlement is a provision that requires Texaco to divest its aviation gasoline assets. Without such a provision, a combined ChevronTexaco would control 73 percent of the aviation gasoline market, which serves primarily small general aviation aircraft.

Under the terms of the settlement, if the sale of Texaco's assets to Shell Oil doesn't work out, Texaco assets will be placed in an irrevocable trust until a sale to a buyer acceptable to state and federal regulators can be arranged.


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