The Federal Trade Commission voted unanimously yesterday to seek a court injunction blocking Mobil Corp.'s acquisition of Marathon Oil Co. but did so on grounds that could permit the takeover by a joint Mobil venture with Amerada Hess Corp.
The action, which had been viewed as a possible signal of the FTC's merger policy intentions, was based on the commission's concern about competition in gasoline marketing in 10 to 12 metropolitan areas in the upper Midwest, an agency spokesman said.
The request for the preliminary injunction will be filed today or Thursday and, if the injunction is issued, it would bar Mobil from purchasing any of Marathon's stock or assets for 20 days after the judge issues the order. Mobil's hands already are tied by a court order, however, while U.S. Steel is free to to complete its competing offer for Marathon.
The FTC said in announcing the action that the request for an injunction might be withdrawn if a court-approved plan leading to the divestiture of Marathon's "transportation, storage, and marketing assets" were offered.
Miller said the decision is consistent with his repeated statements that the FTC should "put its resources into the horizontal areas," paying closest attention to the activities of companies that compete head-on in the same markets.
Mobil and Amerada Hess announced a plan Monday for Amerada Hess to take over refining, marketing and transportation properties of Marathon if Mobil succeeds in its $6.5 billion acquisition.
A Mobil spokesman said the company would have no comment on the FTC action until company officials take a closer look at it.
The decision, which FTC Chairman James C. Miller III called "agonizing," was issued after a 2 1/2-hour meeting. It drew immediate criticism from two members of the four-member body, who suggested that permitting the sale of Marathon's oil resources will limit the supplies available to independent marketers.
"The implication of the commission's action is that Marathon can be stripped of its crude oil reserves without a negative impact on competition from price-cutting independent marketers now buying from Marathon," said FTC member Patricia Bailey in a statement. Commissioner Michael Pertschuk also issued a statement suggesting that depriving Marathon of crude reserves "will undermine this procompetitive role."
The FTC's Bureau of Competition rejected several consent agreements proposed by Mobil before issuing yesterday's decision. But officials refused comment on the negotiating role the joint venture with Amerada Hess played in the days before yesterday's limited action was issued. One FTC official said the order "was not done so as to give a wink to Hess."
Mobil, in the meantime, went into court to try to buy some time for its offer. The oil company filed an appeal in Cincinnati of Monday's decision giving U.S. Steel the green light to go ahead with its tender offer, and also attempted to win a modification of another court order currently barring Mobil from moving forward.
Mobil appealed a decision by Judge Joseph Kinneary, who Monday upheld two key provisions of the U.S. Steel-Marathon agreement. Mobil also asked the appeals court to delay the date on which U.S. Steel may purchase Marathon's stock. Unless a delay is granted, U.S. Steel can begin buying Marathon stock next Tuesday.
Mobil also asked the appeals court to allow it to go back to a federal judge in Cleveland to request a modification of a court order blocking its takeover bid. That request would be based on the announcement made on Monday by Mobil and Amerada Hess that Mobil would sell Marathon's marketing, refining and transportation properties to Amerada Hess if Mobil acquires Marathon.
The reason for the proposal was to eliminate antitrust arguments against Mobil's proposed takeover of Marathon. U.S. District Court Judge John Manos in Cleveland based an injunction against Mobil on the likelihood that Marathon would succeed in opposing the takeover on antitrust grounds. That injunction has left Mobil at a serious disadvantage, frozen in place while U.S. Steel is allowed to proceed.
Yesterday, attorneys for Mobil asked Manos to reopen the antitrust case in Cleveland.
U.S. Steel said yesterday that it has been tendered approximately 54 million shares of Marathon's common stock--more than 90 percent of the outstanding shares. U.S. Steel had offered to buy 30 million shares of Marathon for $125 a share. The other shares are expected to be exchanged for U.S. Steel notes worth an estimated $86.