(Click here for previous coverage.)
According to the FTC's complaint, the deal between Pilot and Flying J would have reduced competition for certain long-haul trucking fleets for which Pilot and Flying J were the first and second best choices for their diesel needs. "The proposed settlement will resolve the competitive concerns resulting from Pilot's acquisition of Flying J's travel center business, which would have likely resulted in higher diesel fuel prices for long-haul trucking fleets," said Richard A. Feinstein, director of the FTC's Bureau of Competition.
The divestiture to Love's, along with Love's expansion plans, will allow it to compete better for long-haul fleets that otherwise would be harmed by Pilot's acquisition of Flying J.
The settlement order contains several provisions designed to ensure that Love's can become a successful competitor to the newly formed Pilot Flying J: The order requires Pilot to provide Love's, at its request, access to and use of a fuel purchase card system that Pilot is acquiring (and maintain appropriate firewalls during this access and use); continue operating Wendy's restaurants affiliated with certain divested travel centers for one year; not interfere with the transfer of any employees who choose to work with Love's after it acquires the travel centers; and provide Love's with business information related to the 26 travel centers being sold and maintain the travel centers as viable businesses until they can be transferred to Love's.
In addition, the order allows the FTC to appoint an interim monitor to oversee the sale of the assets, if necessary, and contains reporting and other terms to ensure Pilot's compliance.
Click hereto view the FTC documents.
Meanwhile, the deal has triggered some other changes in the travel center industry. Denny's Corp. has announced that it will begin converting the restaurant operations of up to 140 Flying J Travel Centers to Denny's units starting in July 2010.
As previously announced in March 2010, Denny's has been selected as the full-service restaurant operator of choice for Pilot. On June 30, 2010, the FTC approved the merger of Pilot and Flying J, enabling the agreement with Denny's to proceed.
Denny's expects to have 80 sites converted by yearend 2010, including 10 sites that will operate as company restaurants. The balance of the conversion opportunities are expected to open as Denny's in 2011.
On an annualized basis, the full potential of conversions is expected to add an estimated 7% to 8% to Denny's system-wide sales. Denny's franchisees will convert and operate most of the Flying J locations, with the company planning to convert and operate approximately 15 of the restaurants. The capital outlay is expected to be approximately $565,000 per conversion. Existing employees will generally remain in place.
Denny's has also arranged a program through Pinnacle Commercial Capital to provide access to $40 million in credit facilities for Denny's franchisees.
Spartanburg, S.C.-based Denny's is one of America's largest full-service family restaurant chains, with 1,322 franchised and licensed units and 237 company-owned units, with operations in the United States and worldwide.
Also, Pilot said that effective immediately, its nationwide network of travel centers will accept TCH cards. TCH cards provide one-card convenience for professional drivers to manage fuel, maintenance and cash advance needs. Long-haul transportation fleets across the U.S. use TCH cards for fuel and fleet-related purchases.
TCH cards can be used at the fuel pump or in store at all Pilot Flying J locations.
Ogden, Utah-based TCH offers payment cards that support various transportation and financial needs. Its payment products are accepted at more than 7,500 locations in the United States and Canada. TCH's portfolio includes TCH Fleet Fuel Card, TCH Express, FP Solutions, SFJ Express, TCH Fleet MasterCard, TCH SmartPay and TCH Checks and MoneyCodes.
And Pilot has announced that it has sold Flying J's Scan & Go assets to Pegasus TransTech. Beginning immediately, TRANSFLO Express truckstop scanning from Pegasus TransTech will be deployed at all 180 Scan & Go Express locations in the United States and Canada. There is also an agreement to install TRANSFLO Express at the remaining Flying J sites, excluding Quebec, within the next 60 days.
With TRANSFLO Express, documents are sent electronically to the fleet for immediate billing and payroll processing. Because TRANSFLO Express expedites document delivery, fleets and drivers get paid faster, the company said.
Tampa, Fla.-based TRANSFLO Express operates the largest truckstop scanning network, including all Pilot travel centers, hundreds of other truckstops nationwide and now the Flying J truckstops.
"Pilot has signed an agreement with Pegasus TransTech to be a provider of scanning solutions at all Pilot Flying J locations," said Scott Wombold, Pilot's vice president of national accounts and wholesale fuel. "Since July 2002 when Pegasus TransTech first launched truckstop scanning at Pilot Travel Centers, our customers have been able to receive same-day access to their delivery documents."
And the Pilot Flying J deal is causing ripples beyond the industry, into politics. Tennessee Democratic gubernatorial candidate Mike McWherter is criticizing a $1.8 billion merger between Flying J and Pilot, which is owned by Republican candidate Bill Haslam and his family.
"This is a major addition to a growing list of concerns over Bill Haslam's oil interests," McWherter said in a press statement.
The McWherter campaign noted the FTC had originally filed an anti-trust complaint in which regulators cited "competitive concerns" about the merger because the deal at that point "would have likely resulted in higher diesel fuel prices for long-haul trucking fleets."
Despite FTC approval of the deal and the sale of the locations to Love's, the McWherter campaign said the merger will create an "oil goliath" that will cause competitive problems for "mom-and-pop" truckstop operators who now will be "forced to compete with the purchasing power of a big oil conglomerate."
Dave Smith, a spokesperson for the Haslam campaign, told CSP Daily News: "We're focused on the Republican primary, but Mr. McWherter is making a goofy and tired argument. Growing companies should take note of his tone, because any governor would be happy to have a home-grown and growing top-10 national company headquartered in their state."
The new Pilot Flying J is headquartered in Knoxville, Tenn., and has more than 550 interstate travel center and travel plaza locations. The company employs more than 20,000 people and is the largest retail operator of travel centers in North America.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.