Exxon-Mobil Merger Approved

Concluding a year-long review, government regulators Tuesday approved the $81 billion merger of Exxon and Mobil, creating the world's largest privately owned petroleum company.

The new company, which will reunite two of the biggest entities left by the 1911 government breakup of John D. Rockefeller's Standard Oil empire, will be called Exxon-Mobil and be based in Irving, Texas.

The Federal Trade Commission required as part of the deal that the two oil giants sell more than 2,400 service stations -- mostly in the Northeast, California and Texas -- to ensure retail competition where the two companies have large, overlapping market shares.

Government approval had been expected and clears the way for Exxon Corp., and Mobil Corp., who announced their intention to merger last December, to complete the deal, probably in the coming weeks.

The four FTC commissioners, meeting behind closed doors, voted unanimously to approve the merger after a morning-long briefing in which the agency's staff outlined the divestiture requirements, said an agency spokesperson.

When Exxon, the country's largest oil producer, and Mobil, which is second largest, announced the merger a year ago, federal regulators and members of Congress, voiced concern about potential anti-competitive problems, especially in retail gasoline sales in some parts of the country.

To address those concerns, the two companies agreed to demands by the FTC that they sell off about 15 percent of their 2,413 service stations, mostly in New England, the mid-Atlantic states, Texas and California, where the two companies in some areas control 20 to 35 percent of retail market.

Exxon also will have to sell some other assets, the FTC said.

Without such divestitures, the merger "would significantly injure competition" in the areas of retail sales and in oil refining in California, the FTC concluded.

"Because Exxon and Mobil are such large and powerful competitors...the commission insisted on extensive restructuring [of the combined company] before accepting a proposed settlement," said FTC Chairman Robert Pitofsky.

"This settlement should preserve competition and protect consumers from inappropriate and anti-competitive price increases," he said.

While the FTC order reflects the most extensive divestitures in the agency's history, they still represents only a small portion of the two companies' nearly 16,000 gasoline stations and $138 billion in combined assets.

The two companies have said the merger was needed to reduce costs and compete with the huge, low-cost government-owned oil companies in Saudi Arabia, Iran, Mexico and Venezuela. Exxon and Mobil executives have said the merger will eliminate about 9,000 of the two companies' 120,000 jobs.

The Exxon-Mobil deal reflects a rush by the major oil companies toward consolidation.

A year ago, British Petroleum completed its merger witAmoco, and BP-Amoco's proposed $29 billion purchase of Atlantic Richfield is nearing approval at the FTC.