Friday, February 18, 2000

OTTAWA - Today, at a news conference, Democracy Watch responded to record high gas prices by calling for a review of past mergers in the gasoline industry in Canada and the U.S. Democracy Watch released a petition to the Attorney-General of Québec, and a submission to the U.S. Federal Trade Commission concerning the Exxon-Mobil merger.

In its 20-page petition, Democracy Watch calls on Linda Goupil, Attorney-General of Quebec, to use her power under the federal Competition Act to request from the federal Competition Bureau all files concerning the 1985 Gulf-Ultramar merger in the gas industry in Québec, and to charge the industry with abusive practices if warranted.

"The failure of the Competition Bureau to challenge past mergers of companies such as Gulf-Ultramar and Imperial Oil-Texaco is a key factor in the skyrocketing gas prices in Canada." said Daniel Martin Bellemare, Counsel for Democracy Watch. "A full review is long overdue."

The petition quotes a then-secret December 20, 1985 memorandum from Michael O'Farrell, then-Commissioner of Competition, to Michel Côté, then-Minister of Consumer and Corporate Affairs. In the memorandum, obtained under the Access to Information Act in 1999, O'Farrell reviewed the proposed takeover of Gulf Canada by Ultramar Canada and Ultramar's planned closure of one of Gulf's refineries in Montreal. O'Farrell concluded that there was a shortage of gas in Quebec, and that the takeover and closure would concentrate control in the industry and allow the companies to increase gasoline prices and profits.

As the petition details, O'Farrell sent a report in February 1986 to the Restrictive Trade Practices Commission (now known as the Competition Tribunal) on the Gulf-Ultramar merger. However, the federal government and its new Commissioner of Competition Calvin Goldman, in April 1986, ignored these reports and did not challenge the Gulf-Ultramar merger or refinery closure in any way. Before being appointed, Goldman practised law for 10 years with Blake, Cassells & Graydon, the Toronto-based firm that represented Imperial Oil Ltd. at the time.

In its 20-page submission to the U.S. Federal Trade Commission (FTC) concerning the Exxon-Mobil merger, Democracy Watch calls on the FTC to withdraw temporary approval of the merger based on the clear concentration of economic and political power that the merged-company will have. Democracy Watch is also sending its petition and submission to the Ontario and federal governments to alert them to factors that should be considered in reviews of gasoline prices.