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Couche-Tard was able to complete the divestiture of the assets three months after the regulator’s deadline.

Christinne Muschi/The Globe and Mail

Canadian convenience store giant Alimentation Couche-Tard Inc. and its former affiliate CrossAmerica Partners LP have agreed to pay a US$3.5-million civil penalty to settle allegations they breached a U.S. Federal Trade Commission order related to the takeover of Holiday Stationstores Inc.

The two companies violated an FTC order requiring that they divest 10 gas stations in Minnesota and Wisconsin to FTC-approved buyers by June 15, 2018, as part of the Holiday takeover, the trade commission said in a news release on Monday.

Couche-Tard was able to complete the divestiture of the assets three months after the regulator’s deadline.

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The companies also failed to keep one of the stores open and failed to provide accurate and detailed information in compliance reports submitted to the FTC concerning the divestiture efforts, the antitrust agency alleges. The FTC filed a complaint and proposed judgment with the U.S. District Court for the District of Columbia, which made the ruling.

“Commission orders carry the force of law. When the commission requires divestiture of assets by a [certain date], that deadline is not a suggestion,” the FTC said in a statement. “The Commission will not permit parties to profit from order violations of any kind, including late divestitures.”

The penalty marks a rare rebuke for Couche-Tard, which has ballooned from a regional player to one of the world’s largest convenience store chains. The company operates about 14,500 stores in North America, Europe and other countries, mostly under the Circle K banner.

Laurence Myre Leroux, a spokesperson for Couche-Tard, pointed to the FTC news release and said the company would make no further comment. In its ruling, the U.S. District Court said Couche-Tard agreed to settle the matter “without any admission” about the substance of the allegations.

The FTC frequently negotiates settlements with companies, but significant fines are comparatively rare.

The consumer watchdog has signed consent orders with more than 400 companies since 1995, in which the businesses have agreed to certain conditions to get the agency’s support for a merger or acquisition. But the agency has imposed just nine penalties against companies alleged to have violated those competition agreements, the most recent one in 2011.

Laval, Que.-based Couche-Tard won FTC clearance in late 2017 to buy Holiday, a big convenience store operator in the U.S. Midwest with about 520 locations. As a condition for the approval, Couche-Tard agreed to sell 10 of those sites, including one Holiday location and nine CrossAmerica Partners locations, to FTC-accepted buyers within 120 days of the FTC’s clearance order.

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It was not immediately clear why Couche-Tard was not able to meet the FTC deadlines. In its complaint to secure the penalties, the FTC said that in one divestiture deal concerning three of the gas station stores, the company proposed they be resold to a subsidiary of Andeavor Corp. The FTC objected in the case of one store because Andeavor also operated another store in the same market.

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