Mergers & Acquisitions

ARKO Enters Into FTC Consent Agreement Over ExpressStop Deal

Company returning 5 locations to Corrigan Oil to resolve anticompetitive issues
arko gpm corrigan express stop
Logo courtesy of GPM Investments

WASHINGTON — The Federal Trade Commission (FTC) has approved a consent agreement with ARKO Corp. resolving anticompetitive concerns about five ExpressStop convenience stores that the fuel retailer and wholesaler acquired in a 60-store transaction with Corrigan Oil Co. completed on May 18, 2021.

The commission said that the agreement will restore competition in the gasoline and diesel markets in Michigan and Ohio. Under the FTC’s order, ARKO has limited an agreement not to compete that it had imposed on Corrigan Oil, which will be restored as the operator of the five retail fuel outlets in five local Michigan markets.

Corrigan Oil is a Brighton, Mich.-based family-owned business that supplies wholesale and retail fuel to convenience stores.

“ARKO does not believe any aspect of this transaction harmed competition or violated any laws and has already taken steps to comply with the consent agreement,” the parent company of c-store company GPM Investments LLC said.

The FTC complaint alleges that as originally proposed, the agreement not to compete that ARKO and GPM required Corrigan Oil to sign as part of the acquisition harmed customers in local retail gasoline and retail diesel fuel markets throughout Michigan and Ohio. Corrigan was required not to compete not only in the 60 local markets where ARKO and GPM acquired fuel outlets, but also in many other markets. The complaint also alleges that, even in the 60 markets where fuel outlets were acquired, the noncompete agreement was “unreasonably overbroad” in geographic scope and longer than reasonably necessary to protect a legitimate business interest.

According to the complaint, the acquisition also harmed competition in five local Michigan markets for the retail sale of gasoline and, in one of those markets, for sale of diesel fuel. In each market—including two in Saginaw, and one each in Chesaning, Mt. Morris and Mason—the acquisition reduced the independent market participants to two or fewer. “Because of the acquisition, GPM is likely able to raise prices unilaterally in these markets,” the complaint alleged.

The proposed order settling the FTC’s complaint against ARKO and GPM requires them to:

  • Amend the agreement not to compete to only apply to the retail fuel businesses acquired by GPM, excluding the five locations to be returned to Corrigan.
  • Limit the terms of the agreement not to compete in these markets to no broader than 3 years in duration and no more than 3 miles from each Express Stop location.
  • Return to Corrigan, no later than June 28, 2022, the retail fuel outlets in each of the five local markets.
  • Obtain prior FTC approval before acquiring retail fuel assets within a three-mile driving distance of any of the returned locations for 10 years.
  • Not enter into or enforce any agreement not to compete related to acquisitions of a retail business that restricts competition solely around a retail fuel business already owned or operated by GPM; and
  • Notify third parties subject to similar agreements not to compete of GPM’s obligations under the order.

The FTC’s analysis to aid public comment provided further details.

“As part of their $94 million acquisition of Corrigan assets, ARKO and GPM insisted on a sweeping agreement not to compete covering more than 190 GPM locations in Michigan and Ohio, many of which are completely unrelated to the transaction. By keeping Corrigan from competing to sell gasoline and diesel to consumers in these markets, the agreement not to compete harmed customers who otherwise could benefit from this competition,” said Holly Vedova, director of the FTC’s Bureau of Competition.

“ARKO fully cooperated with the FTC throughout the course of this process and appreciates the commission’s professionalism and dedication to quickly resolving this issue,” ARKO said “As a show of good faith during this process, the company never acquired fee title to the real estate on which the five stores included in the consent agreement are located to allow the FTC time to evaluate the transaction.”

The company engaged proactively during the FTC’s review of the noncompete agreement with the seller to alleviate the commission’s concerns regarding any restrictions. Once the FTC stated its preference regarding the stores, ARKO agreed immediately to divest them, it said.

The seller took back operational control of the five stores included in the consent agreement and in the “full spirit of cooperation,” ARKO agreed to restrict the scope of its existing and future noncompete agreements, the company said.

  • GPM is No. 6 on CSP’s 2022 Top 40 update to the 2021 Top 202 ranking of U.S. c-store chains by store count. Watch for the 2022 Top 202 ranking in the June issue of CSP magazine and in CSP Daily News.

Founded in 2003 with 169 stores, Richmond, Va.-based GPM has grown through acquisitions to become the seventh largest convenience store chain in the United States, with approximately 2,950 locations, including approximately 1,350 company-operated stores and approximately 1,600 dealer sites to which it supplies fuel in 33 states and Washington, D.C.

The company operates in three segments: retail, which consists of fuel and merchandise sales to retail consumers; wholesale, which supplies fuel to third-party dealers and consignment agents; and GPM Petroleum, which supplies fuel to GPM and its subsidiaries selling fuel, as well as sub-wholesalers and bulk purchasers.

Brands include Fas Mart, Shore Stop, Scotchman, BreadBox, Young's, Li'l CricketNext Door Store, Village PantryApple MarketJiffi StopAdmiralRoadrunner MarketsJiffy Food MartsE-Z Mart1 Stop and TownStar.

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