"Gasoline isn't retail on a national basis. It's retail in states, cities and metropolitan areas," said Donald Baker, an antitrust attorney in the Washington, D.C.-based law firm of Baker & Miller.

"If one looked at national markets, it probably wouldn't be all that troublesome to combine Mobil's and Exxon's (retail market) shares," said another antitrust lawyer, who spoke on condition of anonymity. "Therefore, the focus (by regulators) is much more likely to be upon regions of the country."

If the two companies agree to merge, they would account for at least 40 per cent of the gasoline sales in six eastern states, according to Petroleum Finance Corp. Mobil said it has a retail gasoline market share ofmore than 20 per cent in the six New England states.

"Forty per cent would raise big alarm bells" for federal regulators, said Baker, who headed the justice department's antitrust division in the 1980s. "My expectation would be that there would be a whole bunch of markets in which the government would force them (Exxon and Mobil) to divest substantial pieces of their retail marketing, and maybe refining, too," he said.

Baker said the Exxon-Mobil deal would likely be reviewed by the Federal Trade Commission, instead of the justice department, because that agency has expertise in oil mergers.

In addition to looking at the overlapping retail operations of Exxon and Mobil, Baker said the FTC would also consider the impact other pending oil mergers would have on overall competition. "They would clearly look at them all together," he said.

Currently, the FTC is considering the merger of British Petroleum Co. Plc and Amoco Corp. of Chicago, and the merger of Ultramar Diamond Shamrock Corp. with the NorthAmerican refining, marketing and transportation operations of Phillips Petroleum Co. Those two combined companies would account for 13.1 per cent and 8.6 per cent, respectively, of national retail gasoline sales.

When you include the December 1997 approval by the FTC of the downstream merger of Royal Dutch/Shell Group and Texaco Inc., which created the top US gasoline seller with 18 per cent of the market, four combined oil companies could account for almost 57 per cent of total gasoline sales.

Baker also said that as the market becomes more concentrated, it will be difficult for future oil companies to get approval of their mergers. "It always become harder for the latecomers," he said. "The FTC may be concerned when it sees a general increase in concentration."

The other oil antitrust lawyer agreed, saying energy companies considering merging may want to rush their applications to the FTC.

"If I were running an oil company and I were thinking this is something I might want to do in the next fewyears, I would think about doing it today," he said.