Image courtesy of Enbridge.

The U.S. Federal Trade Commission has approved the $28 billion merger between Enbridge and Spectra Energy after agreeing to a proposed consent decree.

The Commission said on Thursday that it has reached a consent agreement that will allow Enbridge to merge with Spectra Energy while resolving anti-competition concerns.

The FTC filed a complaint last year alleging that the merger would “likely reduce” natural gas pipeline competition in the Green Canyon, Walker Ridge and Keathley Canyon areas of the Gulf of Mexico.

According to the FTC, both companies hold interests in pipelines that are the two closest pipelines to certain wells in portions of the affected areas.

The agency said it believed that the merger could lower the cost of pipeline transposition options for those wells.

The FTC also expressed concern about the companies’ involvement in the Walker Ridge Pipeline and the Discovery Pipeline.

The FTC said that proposed merger would give Enbridge an ownership interest in both pipelines and allow the company access “competitively sensitive information of the Discovery Pipeline, as well as significant voting rights over the Discovery Pipeline.”

“The exchange of information also may increase the likelihood of tacit or explicit anticompetitive coordination between the Walker Ridge Pipeline and the Discovery Pipelin,” the FTC said in a statement.

Enbridge is the sole owner and operator of the Walker Ridge Pipeline.

Houston-based Spectra indirectly owns a 40 percent interest in the Discovery Pipeline through its indirect stake in DCP Midstream Partners.

Enbridge, through an affiliate, also has offshore natural gas gathering operations in the Gulf of Mexico.

The FTC said that, under the settlement, the companies have agreed to conditions that will preserve competition in the specified areas.

The proposed consent agreement requires Enbridge to establish firewalls to limit its access to non-public information about the Discovery Pipeline.

Board members of the Spectra-affiliated companies that hold a 40 percent share in the Discovery Pipeline must recuse themselves from any vote involving the pipeline, with two limited exceptions.

The order also calls for Enbridge to notify the Commission before acquiring an ownership interest in any natural gas pipeline operating in the Green Canyon, Walker Ridge and Keathley Canyon areas.

Enbridge must also notify the Commission before increasing the 40 percent ownership interest of Spectra affiliate DCP Midstream Partners in the Discovery Pipeline.

The proposed order will remain in effect for 20 years and allows the Commission to appoint a monitor to ensure that Enbridge complies.

Enrbidge said on Thursday that the merger is expected to close in the first quarter of this year.


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