Mergers & Acquisitions

7-Eleven Must Divest Stores to Complete Sunoco Deal

FTC requiring some ownership changes for both companies’ locations

IRVING, Texas -- 7-Eleven Inc.’s $3.3 billion acquisition of approximately 1,100 convenience stores from Sunoco LP would violate federal antitrust law and would harm competition in 76 markets, according to a complaint by the Federal Trade Commission (FTC). Under the terms of the consent agreement to allow the deal to go forward, 7-Eleven must sell 26 retail fuel outlets that it owns to Sunoco, and Sunoco is required to retain 33 fuel outlets that 7-Eleven otherwise would have acquired.

When it closes, 7-Eleven’s acquisition of the company-operated c-stores in Texas, New York, Florida and other states from Sunoco will bring it near to the threshold of 10,000 c-stores in the United States. The deal—even at approximately 1,067 locations—is the company’s largest acquisition ever, taking advantage of Sunoco’s shift in focus to wholesale fuel.

  • 7-Eleven ranked No. 1 on CSP's 2017 Top 202 list of the largest c-store chains in the United States. Ahead of the 7-Eleven deal, Sunoco ranked No. 6 on the list. Click here to read "Ranking the Top 40 C-Store Chains: A Year-End Review."

Seven & i Holdings Co. Ltd, the Tokyo-based parent company of 7-Eleven, has agreed to these conditions to settle the FTC charges.

Retail fuel stations compete on price, c-store format, product offerings and location, and they pay close attention to nearby competitors, the FTC said. Because few consumers are willing to travel great distances to purchase fuel, the markets for retail fuel are localized, generally ranging from a few blocks to a few miles. In some situations, a single station competes in more than one of these small, local markets. The complaint alleges that, without a remedy, the acquisition would result in a highly concentrated market in 76 markets. In 18, there would be a monopoly. In 39, the number of competitors would be reduced from three to two, and in 19, the number of competitors would be reduced from four to three.

The 76 markets are within the following 20 metropolitan statistical areas: Boston; Brownsville, Texas; Buffalo, N.Y.; Fort Myers, Fla.; Corpus Christi, Texas; Daytona Beach, Fla.; Killeen, Texas; Laredo, Texas; Mission, Texas; Miami; Gettysburg, Pa.; Titusville, Fla.; Pittsburgh; Richmond, Va.; San Antonio; Venice, Fla.; Tampa, Fla.; Roma, Texas; Victoria, Texas; and Washington, D.C.

The complaint alleges that without a remedy, the acquisition would increase the likelihood either that 7-Eleven could unilaterally raise prices or that the small number of remaining competitors could increase prices by coordinating their actions.

Sunoco intends to convert the acquired or retained stations from company-operated sites to commission agent sites. It will have full control over fuel pricing and supply at all of these locations.

The FTC’s vote to issue the complaint and accept the proposed consent order for public comment was 2-0. The agreement will be subject to public comment for 30 days, continuing through Feb. 20, 2018, after which the commission will decide whether to make the proposed consent order final.

Dallas-based Sunoco is a master limited partnership (MLP) that operates 1,346 c-stores and gas stations and distributes motor fuel to 7,898 c-stores, independent dealers, commercial customers and distributors located in more than 30 states. Its parent, Energy Transfer Equity LP, owns Sunoco's general partner and all of Sunoco's incentive distribution rights.

Irving, Texas-based 7‑Eleven operates, franchises or licenses more than 63,000 c-stores in 18 countries, including 10,900 in North America.

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