As part of a previously signed definitive agreement, Valero through a subsidiary was to acquire a couple of petroleum storage and distribution terminals in California at Martinez and Richmond from a subsidiary of Houston-based midstream company Plains.
The Federal Trade Commission (FTC) which launched an extensive investigation into the Valero-Plains transaction decided there was no merit in proceeding with any regulatory action on it. In its investigation, FTC found that Valero and Plains did not compete with each other in California.
Following the completion of the FTC’s probe, the Office of the Attorney General for the State of California had filed suit in United States District Court for the Northern District of California to prevent the transaction from moving forward.
Plains and Valero said that in their best interests to cancel the transaction instead of waiting on the outcome of a lengthy trial.
This, Valero stated was despite the court denying the Attorney General’s motion for a temporary restraining order and its motion for a preliminary injunction in the transaction.
Valero added that going through the trial meant that there will be continued uncertainty among the employees and customers of the Martinez and Richmond terminals. Besides, the trial would have resulted in significant expense caused by defending a taxpayer-funded lawsuit, stated Valero.
In July, Valero revealed its intentions to expand capacity at the two terminals meaningfully which would benefit customers and California consumers, while adding that it would vigorously defend the transaction in federal court.
California Attorney General Xavier Becerra alleged that the transaction would have resulted in higher gas prices at the pump for the end users in the state.
Becerra stated: “At the California Department of Justice, it’s our responsibility to combat threats to our state’s thriving and competitive marketplace. That’s why we took on this proposed acquisition.
“Simply put, we strongly believed that Valero's action could have suffocated open competition and led to higher gas prices for hardworking Californians.”
