The Federal Trade Commission yesterday effectively delayed Aloha Petroleum Ltd.'s purchase of 18 Mahalo gas stations on O'ahu, after arguing before a federal judge in Hawai'i that the deal will likely lead to higher gas prices for consumers statewide.

U.S. District Judge Helen Gillmor did not rule on the merits of the FTC's case, but scheduled a preliminary injunction hearing for next month, after Aloha agreed to hold off on the $18 million purchase it wanted to complete today.

The regulatory agency filed a complaint late Wednesday to block the sale by Mahalo's Florida-based owner, Trustreet Properties Inc., arguing that the deal would combine O'ahu's two closest competitors selling low-priced gas, and give Aloha an opportunity to raise prices.

FTC attorney Michael Bloom said a hired expert predicted that Aloha acquiring Mahalo and complete control of a fuel import terminal would result in retail gas prices rising 16 cents per gallon.

The sale would make Aloha the second biggest gas retailer on O'ahu, behind Chevron, in terms of market share, the FTC said in its complaint.

The FTC also opposes the sale because it would reduce the number of companies that can import gas — a threat that the FTC said helps keep prices lower for gas sold by Hawai'i's two refinery owners, Chevron and Tesoro.

Aloha and Trustreet share ownership and use of an import terminal that can compete with a terminal owned by Royal Dutch Shell plc and the two refineries.

Only Tesoro, Trustreet and Aloha have offered to sell or sold gas to retail stations not affiliated with a terminal or refinery owner, the FTC said, arguing that prices will rise if the availability of imported gas to independent retailers is reduced.

"Aloha's acquisition of the petroleum-related assets of Trustreet will further concentrate an already concentrated market in the marketing of gasoline by bulk suppliers in Hawai'i ... and substantially lessen competition in that market," the agency said in its complaint.

Aloha attorney Marc Schildkraut said that Trustreet does not affect refinery gas prices because Trustreet has no intention of importing gas.

He said Trustreet's predecessor tried it once in 2002 by splitting a load of imported gas with Aloha and found it to be too costly.

Schildkraut also said Aloha's acquisition of Mahalo stations would result in per-gallon savings of 2 cents for individual consumers and up to 4 cents for groups and 16 cents for fleet operators by introducing Aloha incentive programs at the 18 retail stations.

"Prices are going to fall as a result of this acquisition," he said.

Trustreet attorney Paul Alston said the company is a real estate investment company that has no desire to operate gas stations or an import terminal, and may elect to close the stations if Aloha's purchase is blocked.

"That would be harmful to competition," he said.

Bob Maynard, Aloha's president and CEO, said the sale is "pro-competitive" and would increase Aloha's competitive position in the market against bigger national and international companies.

"We believe O'ahu motorists will benefit from the opportunity to purchase Aloha's competitively priced gasoline at a greater number of locations," he said. "This is exactly what our purchase of Mahalo would do."

Maynard said Aloha has consistently offered lower gas prices than bigger competitors since 1977. The company operates about 60 stations on O'ahu and the Big Island associated with its Island Mini-Mart convenience stores, as well as 7-Eleven, Fastop and other convenience store brands.

Trustreet, a publicly traded real estate investment trust, was created by a merger involving US Restaurant Properties, which bought 25 O'ahu Texaco stations and the half interest in the terminal for about $40 million in 1998 as part of a court-ordered sale to satisfy antitrust issues after Texaco and Shell merged.

USRP previously had trouble leasing or selling the stations. In 2000, the company it selected to lease the stations, B.C. Oil of California, filed for bankruptcy. Then a deal to sell or lease the stations to Lex Brodie's Tire Co. in 2002 fell apart after Lex Brodie's was taken over by a lender at foreclosure.

USRP was able to sell several of the original 25 stations, but was forced to operate most of them.

The proposed sale of the remaining stations was announced in February and had been scheduled to close today.

Judge Gillmor scheduled a hearing on whether to block the sale for Aug. 23-24.

If Aloha prevails, the sale could be completed.

The FTC, however, could still hold its own hearing before the commission that could result in an order for Aloha to sell some or all of the Trustreet assets.