A massive deal in the convenience store industry has been thrown into doubt after the Federal Trade Commission called 7-Eleven’s purchase of 3,800 Speedway stores and gas stations “illegal” and “anti-competitive” putting the $21 billion deal that closed Friday (May 14) in jeopardy.
In a press statement released alongside the company’s announcement that the nine-month-long transaction was complete, FTC Acting Chairwoman Rebecca Kelly Slaughter and Commissioner Rohit Chopra called the closing declaration highly unusual and extremely troubling.
“We have reason to believe that this transaction is illegal,” the FTC statement read, noting the significant competitive concerns it had in hundreds of local markets across the country.
In addition, the two FTC members said the Commission had spent significant resources investigating this transaction, and that 7-Eleven, its Japanese parent company Seven & i Holdings, and Speedway owner Marathon Petroleum had not yet received majority support from the five-member antitrust panel.
“[7-Eleven] and Marathon’s decision to close under these circumstances is highly unusual, and we are extremely troubled by it,” the statement read, adding that “the parties have closed their transaction at their own risk” and that the FTC would continue its investigation with the help of state attorneys general.
7-Eleven Refutes FTC Claims
In addition to its deal-closing announcement, 7-Eleven released a separate statement refuting the FTC’s comments.
“7‑Eleven is disappointed by the statement as it fails to acknowledge the facts that led to 7‑Eleven closing the transaction,” the statement read. “To be clear, 7‑Eleven was legally allowed to close on the Speedway transaction [Friday May 14] and statements or implications to the contrary are false.”
Specifically, 7‑Eleven said it had negotiated and signed a closing settlement agreement with FTC staff at the end of April that resolved all of the Commissioners’ anti-competitive concerns, and would have seen the sale of 293 fuel outlet locations.
However, less than three days before the deal was set to close, 7-Eleven said Acting Chairwoman Slaughter and Commissioner Chopra indicated that they wanted more time to review the settlement agreement.
“7‑Eleven took the request very seriously, but such a last-minute delay would have created enormous disruption to the lives of our new colleagues at Speedway and to the business,” the parent company of 14,000 U.S. retail locations said. “Given that there was no legal basis for such a delay and given that 7‑Eleven was abiding by the negotiated settlement agreement, we closed [Friday May 11] on schedule.”
So Now What?
With both sides entrenched in their positions it seems clear that the convenience store spat will continue, if not also escalate and expand, and in turn, delay a final FTC vote on a purported agreement that would have left 93 percent of the stores involved in the deal intact.
In addition, if further litigation and/or federal court appeals were to occur, it would also burden the transaction with ongoing and additional legal costs as well as possible integration delays.
In the meantime, 7-Eleven CEO Joe DePinto is moving forward as planned.
“Speedway is a great brand and a strong strategic fit for our business that significantly diversifies our presence throughout the North American market, particularly in the Midwest and on the East Coast,” DePinto said. “Together, we have the opportunity to redefine and enhance the customer convenience experience nationwide. This is a groundbreaking moment in our company’s proud history.”