US FTC objects to coal merger

US FTC objects to coal merger, says deal may hurt power producers

Washington (Platts)--31Mar2004


The US Federal Trade Commission has objected to a merger of two coal
producers, saying the deal would reduce competition and increase costs of
coal-fired generation. The FTC late Tuesday said Arch Coal's proposed $364-mil
acquisition of Triton Coal would reduce competition in the Powder River Basin
and the agency would seek an injunction to block the deal. Arch is already one
of the dominant coal producers in the region. "The acquisition would result in
the top three competitors controling 86% of 2003 coal production in the
[southern Powder River Basin] and would substantially increase the possibility
of, and harm from, coordinated interaction by these major players," said Susan
Creighton, director of the FTC's Bureau of Competition. "The Commission action
announced today will protect electricity consumers from higher energy prices
that would result from reduced competition in SPRB coal, an important low-cost
energy source for electric generators."

But Arch disagreed with the FTC's opinion. "We believe that the FTC
incorrectly excluded from its analysis the fact that competition in the coal
business is intense and that the transaction would enable Arch itself to
become more competitive and responsive to customers' needs," Leer said. "We
look forward to presenting the facts in court."

This story was first published in Platts real-time news and market reporting
service Platts Electricity Alert (http://electricityalert.platts.com ).