Valero Agrees to 10-Year Ban on Buying California Oil Hubs

SAN FRANCISCO (CN) – A federal judge on Thursday banned Valero from attempting to buy two Bay Area oil terminals for the next 10 years, three months after California sued to block the oil giant’s acquisition of an East Bay pipeline hub.

In a 4-page stipulated ruling, U.S. District Judge William Alsup dismissed the state’s antitrust suit against Valero and barred the oil giant from attempting to acquire two pipeline hubs in the East Bay cities of Richmond and Martinez for the next decade.

California sued the oil giant in June, claiming the proposed acquisition of a pipeline hub in Martinez meant major petroleum companies would control Northern California’s three main oil terminals, enabling them to manipulate supply and drive up gas prices.

Alsup denied the state’s requests for a restraining order and injunction to block the acquisition, but he placed conditions on the deal so Valero could more easily forfeit the facility if the deal was found to be anticompetitive at trial.

Last month, Valero dropped its bid to buy the pipeline hubs in Martinez and Richmond from Plains All American Pipeline. In deciding to scrap the deal, both companies cited “the continued uncertainty that a lengthy trial would create” for employees and customers of the terminal.

This wasn’t the first time Valero was blocked from acquiring the oil terminals. In 2005, the company was forced to forfeit the same two pipeline hubs, which it acquired in a $2.8 billion purchase of Kaneb Services and Pipe Line Partners, after the Federal Trade Commission and California threatened to sue.

In a statement issued Thursday, California Attorney General Xavier Becerra praised the 10-year ban on Valero’s acquisition of Bay Area pipeline hubs as a victory for Northern California consumers.

“The Valero takeover could have led to higher prices at the pump for Californians,” Becerra said. “Today’s judgment puts a stop to that. And it sends a strong message: California will protect its consumers and competition so that our state’s economy – the sixth largest in the world – can thrive.”

According to the ruling issued Thursday, Valero may petition the court to terminate or modify the 10-year ban if “a change in factual conditions” warrants such action.

Valero spokeswoman Lillian Riojas and Plains All American did not immediately return phone calls seeking comment Thursday afternoon.


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