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The Williams Companies, Inc. and MAPCO, Inc., have agreed to settle Â鶹´«Ã½ Trade Commission charges that portions of their merger could raise prices for consumers and violate federal antitrust laws. The Commission found that the merger could drive up propane costs for Midwestern consumers by more than $2 million per year and raise costs of transportation for producers of natural gas liquids in Wyoming by $8 million or more per year. To settle the FTC charges, Williams will provide Midwest pipeline capacity to Kinder Morgan Energy Partners, an operator of propane terminals, and will allow any new competing pipeline to connect to its Wyoming gas processing plants.

Williams and MAPCO are both based in Tulsa, Oklahoma. Williams is in the energy and communications industries and operates natural gas processing plants in Wyoming and pipelines that supply propane to the upper Midwest. Its 1997 revenues were $4.4 billion. MAPCO is in the energy industry. One of its principal businesses is the production, shipment and sale of natural gas liquids such as propane, butane and natural gasoline. In November 1997, Williams and MAPCO agreed to merge.

According to the FTC complaint, Williams and MAPCO own and operate pipelines used to transport propane to markets in Iowa, Northern Illinois, Southern Wisconsin and Southern Minnesota. The propane is shipped by pipeline to terminals where it is picked up by retail propane dealers. In certain areas -- Central Iowa, including Des Moines and Ogden; Northern Iowa and Southern Minnesota, including Clear Lake and Sanborn, Iowa and Mankato, Minnesota; Eastern Iowa, including Iowa City; Southern Wisconsin and Northern Illinois, including Janesville, Wisconsin and Rockford, Illinois; and North Central Illinois, including Tampico and Farmington -- terminals supplied by

Williams and MAPCO pipelines are the only or almost the only sources of propane. MAPCO transports propane to its own terminals and Williams provides pipeline transportation to MAPCO's terminal competitor, Kinder Morgan. Williams and Kinder Morgan file joint tariffs with Â鶹´«Ã½ Energy Regulatory Commission on various pipeline routes, and they have an agreement which divides the reveunes from those joint tariffs. Following the acquisition, Williams will have both the incentive and the ability to restrict Kinder Morgan's access to propane, which could reduce competition and raise propane prices by more than $2 million per year, the FTC alleges. Moreover, the joint tariff and tariff division agreement between Williams and Kinder Morgan could facilitate coordinated action between them in setting tariffs on their competing pipelines. To remedy the anticompetitive effects, Williams has agreed to a long term lease of its pipeline to Kinder Morgan that will eliminate the joint tariffs and tariff division agreement. The agreement will ensure Kinder Morgan's ability to act as an independent competitor in the transportation and terminaling of propane in these markets the FTC said.

MAPCO owns the only pipeline that transports a mixture of natural gas liquids, called raw mix, from processing plants in Southern Wyoming to major fractionation centers where it is separated into its component parts -- ethane, butane, propane and the like. Before MAPCO and Williams agreed to merge, Williams and other companies had discussions about building a pipeline to compete with the MAPCO pipeline. These discussions ended when Williams entered into the agreement to merge with MAPCO. Without Williams' participation or cooperation, the prospects for such a competing pipeline are substantially reduced. And without the threat of a competing pipeline, MAPCO will have less of an incentive to expand its existing pipeline or to offer a reduced tariff. To settle the FTC charges, Williams promised to agree to connect its Wyoming gas processing plants to any pipeline that seeks a connection in the future, so that persons who have their natural gas processed in those plants can choose either pipeline for transportation.

In addition, Williams will be required to provide the FTC prior notice of any intention to acquire propane pipeline or terminal assets in Iowa or within 70 miles of the Iowa border.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

An announcement regarding the proposed consent agreement will be published in the Â鶹´«Ã½ Register shortly. The agreement will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

Copies of the complaint and consent are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 981 0007)