Alaska wins federal judge's approval to defend oil company merger in court

Posted: Wednesday, February 23, 2000

SAN FRANCISCO - The state of Alaska can join the defense of the $30 billion merger between oil giants BP Amoco PLC and Atlantic Richfield Co., a federal judge ruled Tuesday.

U.S. District Judge Susan Illston granted Alaska's request to enter the case over the objection of the Federal Trade Commission, which sued to block the merger.

California, Oregon and Washington have filed a separate suit challenging the merger. Illston agreed to consolidate their suit with the FTC case. A seven-day hearing on a request by the FTC and the three states for an injunction against the deal is scheduled to start the week of March 20.

London-based BP Amoco agreed last March to acquire Los Angeles-based Arco. The purchase would create the world's second-largest nongovernment oil company, behind ExxonMobil.

The FTC and the three states say the new company would gain virtual control of Alaska crude oil supplies to West Coast refineries, with the power to force price increases at the gas pump. The companies say oil prices are set by the international market, which would be unaffected by the merger.

Alaska sought to enter the case to defend the merger after the two companies agreed with the state to sell some of their Alaska holdings, reducing their combined share of the state's oil production from 70 to 55 percent.

The state contends the so-called Charter for Development, which is binding only if the merger takes place, will encourage increased oil production and more competition. Alaska, heavily dependent on oil revenue, should be allowed into the case to defend its interests, the state argued.

``What we hope to achieve is to show the kind of analysis we engaged in to conclude that the charter is the best protection for Alaska in the long term,'' Attorney General Bruce Botelho said from San Francisco.

Support for the charter is not universal. The agreement has been criticized by Alaskans across the political spectrum, including two former governors and a number of lawmakers, as being not in the state's best interests.

Botelho said the state would also get to participate in any settlement talks between BP Amoco and the FTC.

FTC lawyer Barbara Boast said the state's agreement with the oil companies was a separate issue that had no legal connection to the validity of the merger.

Illston agreed that the oil companies could defend their merger adequately without the state's help, but said the selloff agreement gave Alaska a stake in the proceedings that justified its intervention.

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