II 110th CONGRESS 1st Session S. 878 IN THE SENATE OF THE UNITED STATES March 14, 2007 Mr. Kohl (for himself and Mr. Specter) introduced the following bill; which was read twice and referred to the Committee on the Judiciary A BILL To prevent anti-competitive mergers and acquisitions in the oil and gas industry.

1.

Short title

This Act may be cited as the Oil Industry Merger Antitrust Enforcement Act.

2.

Statement of findings and declarations of purposes

(a)

Findings

Congress finds the following: (1)American consumers are suffering from excessively high prices for gasoline, natural gas, heating oil, and other energy products. (2)These excessively high energy prices have been caused, at least in substantial part, by undue concentration among companies involved in the production, refining, distribution, and retail sale of oil, gasoline, natural gas, heating oil, and other petroleum-related products. (3)There has been a sharp consolidation caused by mergers and acquisitions among oil companies over the last decade, and the antitrust enforcement agencies (the Federal Trade Commission and the Department of Justice Antitrust Division) have failed to employ the antitrust laws to prevent this consolidation, to the detriment of consumers and competition. This consolidation has caused substantial injury to competition and has enabled the remaining oil companies to gain market power over the sale, refining, and distribution of petroleum-related products. (4)The demand for oil, gasoline, and other petroleum-based products is highly inelastic so that oil companies can easily utilize market power to raise prices. (5)Maintaining competitive markets for oil, gasoline, natural gas, and other petroleum-related products is in the highest national interest. (b)

Purposes

The purposes of this Act are to— (1)ensure vigorous enforcement of the antitrust laws in the oil industry; (2)restore competition to the oil industry and to the production, refining, distribution, and marketing of gasoline and other petroleum-related products; and (3)prevent the accumulation and exercise of market power by oil companies.

3.

Burden of proof

Section 7 of the Clayton Act (15 U.S.C. 18) is amended by adding at the end the following: In any civil action brought against any person for violating this section in which the plaintiff— (1)alleges that the effect of a merger, acquisition, or other transaction affecting commerce may be to substantially lessen competition, or to tend to create a monopoly, in the business of exploring for, producing, refining, or otherwise processing, storing, marketing, selling, or otherwise making available petroleum, oil, or natural gas, or products derived from petroleum, oil, or natural gas; and (2)establishes that a merger, acquisition, or transaction is between or involves persons competing in the business of exploring for, producing, refining, or otherwise processing, storing, marketing, selling, or otherwise making available petroleum, oil, or natural gas, or products derived from petroleum, oil, or natural gas; the burden of proof shall be on the defendant or defendants to establish by a preponderance of the evidence that the merger, acquisition, or transaction at issue will not substantially lessen competition or tend to create a monopoly..

4.

Ensuring full and free competition

(a)

Review

The Federal Trade Commission and the Antitrust Division of the Department of Justice shall jointly review and revise all enforcement guidelines and policies, including the Horizontal Merger Guidelines issued April 2, 1992 and revised April 8, 1997, and the Non-Horizontal Merger Guidelines issued June 14, 1984, and modify those guidelines in order to— (1)specifically address mergers and acquisitions in oil companies and among companies involved in the production, refining, distribution, or marketing of oil, gasoline, natural gas, heating oil, or other petroleum-related products; and (2)ensure that the application of these guidelines will prevent any merger and acquisition in the oil industry, when the effect of such a merger or acquisition may be to substantially lessen competition, or to tend to create a monopoly, and reflect the special conditions prevailing in the oil industry described in subsection (b). (b)

Special conditions

The guidelines described in subsection (a) shall be revised to take into account the special conditions prevailing in the oil industry, including— (1)the high inelasticity of demand for oil and petroleum-related products; (2)the ease of gaining market power in the oil industry; (3)supply and refining capacity limits in the oil industry; (4)difficulties of market entry in the oil industry; and (5)unique regulatory requirements applying to the oil industry. (c)

Competition

The review and revision of the enforcement guidelines required by this section shall be completed not later than 6 months after the date of enactment of this Act. (d)

Report

Not later than 6 months after the date of enactment of this Act, the Federal Trade Commission and the Antitrust Division of the Department of Justice shall jointly report to the Committee on the Judiciary of the Senate and the Committee on the Judiciary of the House of Representatives regarding the review and revision of the enforcement guidelines mandated by this section.

5.

Definitions

In this Act: (1)

Oil industry

The term oil industry means companies and persons involved in the production, refining, distribution, or marketing of oil or petroleum-based products. (2)

Petroleum-based product

The term petroleum-based product means gasoline, diesel fuel, jet fuel, home heating oil, natural gas, or other products derived from the refining of oil or petroleum.