The European Commission has conditionally authorised the merger between and Exxon and Mobil, which are active in the full oil and gas chain from exploration to motor fuel retailing. The Commission started the second stage investigation in June 1999 and in assessing the operation has co-operated with the Federal Trade Commission from the US, where the procedure is still pending. The further investigation has dispelled initial doubts that recent concentrations among major competitors might result in too small a cluster of all companies in the market for exploration, development and production of crude oil and natural gas. The big companies would be the only ones capable of searching for and developing unexplored reserves that will be consumed ten to fifteen years from now. They would still be facing competitive constraints from smaller oil companies which indicated that, because of size differences, they would not compete for the same type of exploration rights and they would not be dependent on the bigger explorers to sell their oil. In markets where the new entity may be dominant, the undertakings have made commitments to divest some of their business or transfer control by long term leases. Gas to liquids (GTL) technology enables the conversion of natural gas into finished fuels at the production site. Exxon and Mobil have strong patent positions in alternative GTL technologies. However, even if the parties would hold an essential portfolio of patents, this will not give rise to a dominant position given the small impact on petroleum product markets of products produced with the technology. For the wholesale transmission of natural gas in the Netherlands, Gasunie is the dominant Dutch wholesale transmission company and Exxon has a 25% share in it. Mobil is one of the two competitors to Gasunie and, as a consequence of an agreement between the Gasunie shareholders, Mobil would have to stop competing with Gasunie after the merger. As the Merger Regulation also applies to the strengthening of the dominant position of a third party (Gasunie), the parties committed to divest Mobil’s Dutch trading entity together with its supply and transport contracts. For long distance wholesale transmission of network as in Germany, the existing oligopoly by companies such as Ruhrgas (where Exxon and Mobil are shareholders), BEB and Thyssengas (both jointly controlled by Exxon and other companies) would be strengthened as Mobil, one of the smallest long-distance companies, all operate on this market and as it is a shareholder of Ruhrgas. The parties will divest Exxon’s shares in Thyssengas and will give up majority voting rights in Erdgas Münster, the only potential competitor. For storage of natural gas in the south of Germany, Ruhrgas has a dominant position that would be strengthened as Mobil has concession rights in almost all depleted fields that could be converted and storage facilities. The parties will offer for sale Mobil’s interest up to a certain volume at the market price. The merged entity would, with 40%-45%, become dominant on the EEA base oils (for producing lubricants) market. The parties will either divest certain base oil businesses or pass over control on such businesses by way of long-term leases. In the market for distribution of fuels in Germany, Austria, the Netherlands, Luxembourg, the UK and on French toll motorways, in view of the equity links between Exxon, BP/Mobil and Aral (where Mobil is an important equity holder) and the other sectoral factors of the industry in these countries, the operation would have created or strengthened oligpolistic dominant positions in each of these markets. The parties have offered to divest the fuels part of the BP/Mobil joint venture and to exit from Aral. Exxon and Mobil each have a market share of more than 40% in the world-wide aviation lubricants market. The parties offered to divest Exxon’s aviation lubricants business that has more of a stand-alone character than Mobil’s business. For aviation fuels at Gatwick, the merger would lead to the creation of a single dominant position in view of the parties’ supply position (43%) and control over an important part of the infrastructure. The parties will divest their interests in some pipelines with spare capacity. In view of the above commitments, the Commission decided to clear the operation. The UK competition authorities had requested, pursuant to Article 9 of the Merger Regulation, a partial referral of the case concerning motor fuel retailing in the North-West of Scotland. The Commission dealt with these concerns as part of its assessment of the UK motor fuel retailing market and the dissolution of the fuel production and retailing branch of the BP/Mobil joint venture will also solve any particular concerns related to the North-West of Scotland. (IP/99/708)