[Congressional Record Volume 152, Number 30 (Thursday, March 9, 2006)]
[Senate]
[Pages S1948-S1952]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PETROLEUM INDUSTRY ANTITRUST ACT OF 2006
Mr. SPECTER. Mr. President, the Judiciary Committee, which I chair,
has from time to time examined the implications of mergers,
acquisitions, and joint ventures among companies affecting various
fields in the American economy.
Just a few days ago, a major proposal reached public view in the
telephone industry. There have been major acquisitions and mergers in
many lines of commerce, and there is special concern at the present
time about the impact of acquisitions and mergers of major oil
companies on the price of gasoline, which has soared for American
consumers. I have been concerned about the actions of OPEC over the
years in limiting production and undertaking joint actions which really
violate the spirit of competition and increase the cost of oil.
I ask unanimous consent that at the conclusion of my comments,
letters that I sent to the President as far back as the Clinton
administration, and that I sent to President Bush, outlining the judge-
made laws which have given OPEC immunity under our antitrust laws be
printed in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit No. 1.)
Exhibit 1
U.S. Senate,
Washington, DC, April 11, 2000.
President William Jefferson Clinton
The White House,
Washington, DC.
Dear Mr. President: In light of the very serious problems
caused by the recent increase in oil prices, we know you will
share our view that we should explore every possible
alternative to stop OPEC and other oil-producing states from
entering into agreements to restrict oil production in order
to drive up the price of oil.
This conduct is nothing more than an old-fashioned
conspiracy in restraint of trade which has long been
condemned under U.S. law, and which should be condemned under
international law.
After some considerable research, we suggest that serious
consideration be given to two potential lawsuits against OPEC
and the nations conspiring with it:
(1) A suit in Federal district court under U.S. antitrust
law.
[[Page S1949]]
(2) A suit in the International Court of Justice at the
Hague based, perhaps, upon an advisory opinion under ``the
general principles of law recognized by civilized nations,''
which includes prohibiting oil cartels from conspiring to
limit production and raise prices.
(1) A suit in Federal district court under U.S. antitrust
law.
A case can be made that your Administration can sue OPEC in
Federal district court under U.S. antitrust law. OPEC is
clearly engaging in a ``conspiracy in restraint of trade'' in
violation of the Sherman Act (15 U.S.C. Sec. 1). The
Administration has the power to sue under 15 U.S.C. Sec. 4
for injunctive relief to prevent such collusion.
In addition, the Administration should consider suing OPEC
for treble damages under the Clayton Act (15 U.S.C. Sec.
15a), since OPEC's behavior has caused an ``injury'' to U.S.
``property.'' After all, the U.S. government is a major
consumer of petroleum products and must now pay higher prices
for these products. In Reiter v. Sonotone Corp, (42 U.S. 330
(1979), the Supreme Court held that the consumers who were
direct purchasers of certain hearing aides who alleged that
collusion among manufacturers had led to an increase in
prices had standing to sue those manufacturers under the
Clayton Act since ``a consumer deprived of money by reason of
allegedly anticompetitive conduct is injured in `property'
within the meaning of [the Clayton Act].'' Indirect
purchasers would appear to be precluded from suit, even in a
class action, under Illinois Brick v. Illinois, 431 U.S. 720
(1977), but this would not bar the United States Government,
as a direct purchaser, from having the requisite standing.
One potential obstacle to such a suit is whether the
Foreign Sovereign Immunities Act (``FSIA'') provides OPEC, a
group of sovereign foreign nations, with immunity from suit
in U.S. courts. To date, there has been a ruling on this
issue in only one case. In International Association of
Machinists v. OPEC, 477 F. Supp. 553 (1979), the District
Court for the Central District of California held that the
nations which comprise OPEC were immune from suit in the
United States under the FSIA. We believe that this opinion
was wrongly decided and that other district courts, including
the D.C. District, can and should revisit the issue.
This decision in Int. Assoc. of Machinists turned on the
technical issue of whether or not the nations which comprise
OPEC are engaging in ``commercial activity'' or
``governmental activity'' when they cooperate to sell their
oil. If they are engaging in ``governmental activity,'' then
the FSIA shields them from suit in U.S. courts. If, however,
these nations are engaging in ``commercial activity,'' then
they are subject to suit in the U.S. The California District
Court held that OPEC activity is ``governmental activity.''
We disagree. It is certainly a governmental activity for a
nation to regulate the extraction of petroleum from its
territory by ensuring compliance with zoning, environmental
and other regulatory regimes. It is clearly a commercial
activity, however, for these nations to sit together and
collude to limit their oil production for the sole purpose of
increasing prices.
The 9th Circuit affirmed the District Court's ruling in
Int. Assoc. of Machinists in 1981 (649 F.2d 1354), but on the
basis of an entirely different legal principle. The 9th
Circuit held that the Court could not hear this case because
of the ``act of state'' doctrine, which holds that a U.S.
court will not adjudicate a politically sensitive dispute
which would require the court to judge the legality of the
sovereign act of a foreign state.
The 9th Circuit itself acknowledged in its Int. Assoc. of
Machinists opinion that ``The [act of state] doctrine does
not suggest a rigid rule of application,'' but rather
application of the rule will depend on the circumstances of
each case. The Court also noted that, ``A further
consideration is the availability of internationally-accepted
legal principles which would render the issues appropriate
for judicial disposition.'' The Court then quotes from the
Supreme Court's opinion in Banco Nacional de Cuba v.
Sabbatino, 376 U.S. 398 (1964):
It should be apparent that the greater the degree of
codification or consensus concerning a particular area of
international law, the more appropriate it is for the
judiciary to render decisions regarding it, since the courts
can then focus on the application of an agreed principle to
circumstances of fact rather than on the sensitive task of
establishing a principle not inconsistent with the national
interest or with international justice.
Since the 9th Circuit issued its opinion in 1981, there
have been major developments in international law that impact
directly on the subject matter at issue. As we discuss in
greater detail below, the 1990s have witnessed a significant
increase in efforts to seek compliance with basic
international norms of behavior through international
courts and tribunals. In addition, there is strong
evidence of an emerging consensus in international law
that price fixing by cartels violates such international
norms. Accordingly, a court choosing to apply the act of
state doctrine to a dispute with OPEC today may very well
reach a different conclusion than the 9th Circuit reached
almost twenty years ago.
You should also examine whether the anticompetitive conduct
of the international oil cartel is being effectuated by
private companies who are subject to the enforcement of U.S.
antitrust laws (for example, former state oil companies that
have now been privatized) rather than sovereign foreign
states. If such private oil companies are determined to in
fact be participating in the anticompetitive conduct of the
oil cartel, then we would urge that these companies be named
as defendants in an antitrust lawsuit in addition to the OPEC
members.
(2) A suit in the International Court of Justice at the
Hague based upon ``the general principles of law recognized
by civilized nations,'' which includes prohibiting oil
cartels from conspiring to limit production and raise prices.
In addition to such domestic antitrust actions, we believe
you should give serious consideration to bringing a case
against OPEC before the International Court of Justice (the
``ICJ'') at the Hague. You should consider both a direct suit
against the conspiring nations as well as a request for an
advisory opinion from the Court through the auspices of the
U.N. Security Council. The actions of OPEC in restraint of
trade violate ``the general principles of law recognized by
civilized nations.'' Under Article 38 of the Statute of the
ICJ, the Court is required to apply these ``general
principles'' when deciding cases before it.
This would clearly be a cutting-edge lawsuit, making new
law at the international level. But there have been exciting
developments in recent years which suggest that the ICJ would
be willing to move in this direction. In a number of
contexts, we have seen a greater respect for and adherence to
fundamental international principles and norms by the world
community. For example, we have seen the establishment of the
International Criminal Court in 1998, the International
Criminal Tribunal for Rwanda in 1994, and the International
Criminal Tribunal for the former Yugoslavia in 1993. Each of
these bodies has been active, handing down numerous
indictments and convictions against individuals who have
violated fundamental principles of human rights. For example,
as of December 1, 1999, the Yugoslavia tribunal alone had
handed down 91 public indictments.
Today, adherence to international principles has spread
from the tribunals in the Hague to individual nations around
the world. Recently, the exiled former dictator of Chad,
Hissene Habre, was indicted in Senegal on charges of torture
and barbarity stemming from his reign, where he allegedly
killed and tortured thousands. This case is similar to the
case brought against former Chilean dictator Augusto Pinochet
by Spain on the basis of his alleged atrocities in Chile. At
the request of the Spanish government, Pinochet was detained
in London for months until an English court determined that
he was too ill to stand trial.
The emerging scope of international law was demonstrated in
an advisory opinion sought by the UN General Assembly in 1996
to declare illegal the use or threat to use nuclear weapons.
Such an issue would ordinarily be thought beyond the scope of
a judicial determination given the doctrines of national
sovereignty and the importance of nuclear weapons to the
defense of many nations. The ICJ ultimately ruled eight to
seven, however, that the use or threat to use nuclear weapons
``would generally be contrary to the rules of international
law applicable in armed conflict, and in particular the
principles and rules of humanitarian law.'' The fact that
this issue was subject to a decision by the ICJ, shows the
rapidly expanding horizons of international law.
While these emerging norms of international behavior have
tended to focus more on human rights than on economic
principles, there is one economic issue on which an
international consensus has emerged in recent years--the
illegitimacy of price fixing by cartels. For example, on
April 27, 1998, the Organization for Economic Cooperation and
Development issued an official ``Recommendation'' that all
twenty-nine member nations ``ensure that their competition
laws effectively halt and deter hard core cartels.'' The
recommendation defines ``hard core cartels'' as those which,
among other things, fix prices or establish output
restriction quotas. The Recommendation further instructs
member countries ``to cooperate with each other in enforcing
their laws against such cartels.''
On October 9, 1998, eleven Western Hemisphere countries
held the first ``Antitrust Summit of the Americas'' in Panama
City, Panama. At the close of the summit, all 11 participants
issued a joint communique in which they express their
intention ``to affirm their commitment to effective
enforcement of sound competition laws, particularly in
combating illegal price-fixing, bid-rigging, and market
allocation.'' The communique further expresses the intention
of these countries to ``cooperate with one another . . . to
maximize the efficacy and efficiency of the enforcement of
each country's competition laws.'' One of the countries
participating in this communique, Venezuela, is a member of
OPEC.
The behavior of OPEC and other oil-producing nations in
restraint of trade violates U.S. antitrust law and basic
international norms, and it is injuring the United States and
its citizens in a very real way. Consideration of such legal
action could provide an inducement to OPEC and other oil-
producing countries to raise production to head off such
litigation.
[[Page S1950]]
We hope that you will seriously consider judicial action to
put an end to such behavior.
Arlen Specter.
Herb Kohl.
Charles Schumer.
Mike DeWine.
Strom Thurmond.
Joe Biden.
____
U.S. Senate,
Washington, DC, June 15, 2000.
Hon. William Jefferson Clinton,
President of the United States, The White House, Washington,
DC.
Dear President Clinton: We are writing to urge your
Administration to take immediate and reasonable action in
response to the Organization of Petroleum Exporting
Countries' (OPEC) continued stranglehold on the global oil
market. As you know, OPEC's agreement last March to
automatically increase oil supply if global prices topped $28
per barrel for more than 20 days has been violated--the price
of crude oil has closed over $28 since May 8, and is
currently trading over $33--meaning sky-high oil and gasoline
prices will increasingly, and indefinitely, take a toll on
our economy. We strongly urge you to immediately counteract
OPEC's dangerous intransigence through the use of oil from
our nation's Strategic Petroleum Reserve (SPR) in order to
increase supply, moderate prices, and significantly reduce
our nation's dependence on OPEC decisions for our economic
well-being.
OPEC's continued manipulation of the global oil market has
translated into record high, and rising, gasoline prices in
the United States, and the prospect of severe shortages in
home heating oil next winter. Worst of all with global and
American oil inventories approaching levels not seen since
the mid-1970s, OPEC's continued price gouging will prevent
refiners and distributors of petroleum products from stocking
sufficient supply, meaning OPEC will continue to maintain its
inordinate power over the global and American economies
indefinitely.
Since last September, many of us have been calling on you
and Secretary Richardson to use America's well-stocked SPR as
leverage to counter OPEC's risky profiteering. With global
supply, demand, and inventories remaining out of sync with
each other, and OPEC ministers unwilling to play by the rules
which they themselves created, the United States has every
right to act decisively in the interest of its economic
security. The immediate commencement of a ``swaps'' policy
using SPR oil would moderate the global oil market, and
generally buffer against foreign supply manipulations. And
under current market conditions, a swaps policy provides the
best way to increase the SPR from its current level of 570
million barrels, at no cost to the taxpayer.
OPEC has been emboldened by its highly successful quota
policy over the past two years which has caused oil prices to
effectively triple. OPEC ministers seem to now believe the
United States and the world will accept, and call
economically sustain, oil prices at $30 per barrel and above.
Mr. President, it is simply unacceptable for us to allow our
economy, and the world's economy, to be placed in jeopardy by
a foreign oil cartel. With razor thin oil inventories and
soaring gas prices coupled with new reports of a looming
shortage of natural gas, we may be at the beginning of a
serious and prolonged energy crisis that could send a chill
through every economic sector of our country. The time to act
is now.
Sincerely,
Charles E. Schumer; Carl Levin; Joseph I. Lieberman; Jack
Reed; Patrick J. Leahy; Robert G. Torricelli; Susan M.
Collins; James M. Jeffords; William V. Roth Jr.;
Olympia J. Snowe; Christopher Dodd; Arlen Specter.
____
U.S. Senate,
Washington, DC, April 25, 2001.
President George Walker Bush,
The White House,
Washington, DC.
Dear Mr. President: In light of the energy crisis and the
high prices of OPEC oil, we know you will share our view that
we must explore every possible alternative to stop OPEC and
other oil-producing states from entering into agreements to
restrict oil production in order to drive up the price of
oil.
This conduct is nothing more than an old-fashioned
conspiracy in restraint of trade which has long been
condemned under U.S. law, and which should be condemned under
international law.
After some research, we suggest that serious consideration
be given to two potential lawsuits against OPEC and the
nations conspiring with it:
(1) A suit in Federal district court under U.S. antitrust
law.
(2) A suit in the International Court of Justice at the
Hague based upon ``the general principles of law recognized
by civilized nations.''
(1) A suit in Federal district court under U.S. antitrust
law.
A strong case can be made that your Administration can sue
OPEC in Federal district court under U.S. antitrust law. OPEC
is clearly engaging in a ``conspiracy in restraint of trade''
in violation of the Sherman Act (15 U.S.C. Sec. 1). The
Administration has the power to sue under 15 U.S.C. Sec. 4
for injunctive relief to prevent such collusion.
In addition, the Administration has the power to sue OPEC
for treble damages under the Clayton Act (15 U.S.C. Sec.
15a), since OPEC's behavior has caused an ``injury'' to U.S.
``property.'' After all, the U.S. government is a consumer of
petroleum products and must now pay higher prices for these
products. In Reiter v. Sonotone Corp, 442 U.S. 330 (1979),
the Supreme Court held that the consumers of certain hearing
aides who alleged that collusion among manufacturers had led
to an increase in prices had standing to sue those
manufacturers under the Clayton Act since ``a consumer
deprived of money by reason of allegedly anticompetitive
conduct is injured in `property' within the meaning of [the
Clayton Act].''
One issue that would be raised by such a suit is whether
the Foreign Sovereign Immunities Act (``FSIA'') provides
OPEC, a group of sovereign foreign nations, with immunity
from suit in U.S. courts. To date, only one Federal court,
the District Court for the Central District of California,
has reviewed this issue. In International Association of
Machinists v. OPEC, 477 F. Supp. 553 (1979), the Court held
that the nations which comprise OPEC were immune from suit in
the United States under the FSIA. We believe that this
opinion was wrongly decided and that other district courts,
including the D.C. District, can and should revisit the
issue.
This decision in Int. Assoc. of Machinists turned on the
technical issue of whether or not the nations which comprise
OPEC are engaging in ``commercial activity'' or
``governmental activity'' when they cooperate to sell their
oil. If they are engaging in ``governmental activity,'' then
the FSIA shields them from suit in U.S. courts. If, however,
these nations are engaging in ``commercial activity,'' then
they are subject to suit in the U.S. The California District
Court held that OPEC activity is ``governmental activity.''
We disagree. It is certainly a governmental activity for a
nation to regulate the extraction of petroleum from its
territory by ensuring compliance with zoning, environmental
and other regulatory regimes. It is clearly a commercial
activity, however, for these nations to sit together and
collude to limit their oil production for the sole purpose of
increasing prices.
The 9th Circuit affirmed the District Court's ruling in
Int. Assoc. of Machinists in 1981 (649 F.2d 1354), but on the
basis of an entirely different legal principle. The 9th
Circuit held that the Court could not hear this case because
of the ``act of state'' doctrine, which holds that a U.S.
court will not adjudicate a politically sensitive dispute
which would require the court to judge the legality of the
sovereign act of a foreign state.
The 9th Circuit itself acknowledged in its Int. Assoc. of
Machinists opinion that ``The [act of state] doctrine does
not suggest a rigid rule of application,'' but rather
application of the rule will depend on the circumstances of
each case. The Court also noted that, ``A further
consideration is the availability of internationally-accepted
legal principles which would render the issues appropriate
for judicial disposition.'' The Court then quotes from the
Supreme Court's opinion in Banco Nacional de Cuba v.
Sabbatino, 376 U.S. 398 (1964):
It should be apparent that the greater the degree of
codification or consensus concerning a particular area of
international law, the more appropriate it is for the
judiciary to render decisions regarding it, since the courts
can then focus on the application of an agreed principle to
circumstances of fact rather than on the sensitive task of
establishing a principle not inconsistent with the national
interest or with international justice.
Since the 9th Circuit issued its opinion in 1981, there
have been major developments in international law that impact
directly on the subject matter at issue. As we discuss in
greater detail below, the 1990s have witnessed a significant
increase in efforts to seek compliance with basic
international norms of behavior through international courts
and tribunals. In addition, there is strong evidence of an
emerging consensus in international law that price fixing by
cartels violates such international norms. Accordingly, a
court choosing to apply the act of state doctrine to a
dispute with OPEC today may very well reach a different
conclusion than the 9th Circuit reached almost 20 years
ago.
(2) A suit in the International Court of Justice at the
Hague based upon ``the general principles of law recognized
by civilized nations.''
In addition to such domestic antitrust actions, we believe
you should give serious consideration to bringing a case
against OPEC before the International Court of Justice (the
``ICJ'') at the Hague. You should consider both a direct suit
against the conspiring nations as well as a request for an
advisory opinion from the Court through the auspices of the
UN Security Council. The actions of OPEC in restraint of
trade violate ``the general principles of law recognized by
civilized nations.'' Under Article 38 of the Statute of the
ICJ, the Court is required to apply these ``general
principles'' when deciding cases before it.
This would clearly be a cutting-edge lawsuit, making new
law at the international level. But there have been exciting
developments in recent years which suggest that the ICJ would
be willing to move in this direction. In a number of
contexts, we have seen a greater respect for and adherence to
fundamental international principles and norms by the world
community. For example, we have seen the establishment of the
International Criminal Court in 1998, the International
Criminal Tribunal for Rwanda in 1994, and the International
Criminal Tribunal for the former Yugoslavia in 1993. Each
[[Page S1951]]
of these bodies has been active, handing down numerous
indictments and convictions against individuals who have
violated fundamental principles of human rights.
Today, adherence to international principles has spread
from the tribunals in the Hague to individual nations around
the world. The exiled former dictator of Chad, Hissene Habre,
was indicted in Senegal on charges of torture and barbarity
stemming from his reign, where he allegedly killed and
tortured thousands. This case is similar to the case brought
against former Chilean dictator Augusto Pinochet by Spain on
the basis of his alleged atrocities in Chile. At the request
of the Spanish government, Pinochet was detained in London
for months until an English court determined that he was too
ill to stand trial.
While these emerging norms of international behavior have
tended to focus more on human rights than on economic
principles, there is one economic issue on which an
international consensus has emerged in recent years--the
illegitimacy of price fixing by cartels. For example, on
April 27, 1998, the Organization for Economic Cooperation and
Development issued an official ``Recommendation'' that all
twenty-nine member nations ``ensure that their competition
laws effectively halt and deter hard core cartels.'' The
recommendation defines ``hard core cartels'' as those which,
among other things, fix prices or establish output
restriction quotas. The Recommendation further instructs
member countries ``to cooperate with each other in enforcing
their laws against such cartels.''
On October 9, 1998, 11 Western Hemisphere countries held
the first ``Antitrust Summit of the Americas'' in Panama
City, Panama. At the close of the summit, all eleven
participants issued a joint communique in which they express
their intention ``to affirm their commitment to effective
enforcement of sound competition laws, particularly in
combating illegal price-fixing, bid-rigging, and market
allocation.'' The communique further expresses the intention
of these countries to ``cooperate with one another . . . to
maximize the efficacy and efficiency of the enforcement of
each country's competition laws.''
The behavior of OPEC and other oil-producing nations in
restraint of trade violates U.S. antitrust law and basic
international norms, and it is injuring the United States and
its citizens in a very real way. We hope you will seriously
consider judicial action to put an end to such behavior.
We hope that you will seriously consider judicial action to
put an end to such behavior.
Arlen Specter.
Charles Schumer.
Herb Kohl.
Strom Thurmond.
Mike DeWine.
Mr. SPECTER. Mr. President, today I am going to be putting into the
Record at conclusion of my statement--again I ask unanimous consent--a
proposed modification of the U.S. antitrust laws.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit No. 2.)
Exhibit 2
S. _
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Petroleum Industry Antitrust
Act of 2006''.
SEC. 2. PROHIBITION ON UNILATERAL WITHHOLDING.
The Clayton Act (15 U.S.C. 12 et seq.) is amended--
(1) by redesignating section 28 as section 29; and
(2) by inserting after section 27 the following:
``SEC. 28. OIL AND NATURAL GAS.
``(a) In General.--Except as provided in subsection (b), it
shall be unlawful for any person to refuse to sell, or to
export or divert, existing supplies of crude oil, refined
products derived from crude oil, or natural gas with the
primary intention of increasing prices or creating a shortage
in the market where the existing supplies are located or
intended to be shipped.
``(b) Considerations.--In determining whether a person who
has refused to sell exported or diverted existing supplies of
crude oil, refined products derived from crude oil, or
natural gas has done so with the intent of increasing prices
or creating a shortage in the market under subsection (a),
the court shall consider whether--
``(1) the cost of acquiring, producing, refining,
processing, marketing, selling, or otherwise making such
products available has increased; and
``(2) the price obtained from exporting or diverting
existing supplies is greater that the price obtained where
the existing supplies are located or are intended to be
shipped.''.
SEC. 3. PROHIBITION ON CERTAIN MERGERS IN THE OIL AND GAS
INDUSTRY.
Section 7 of the Clayton Act (15 U.S.C. 18) is amended by
adding at the end the following:
``Notwithstanding any other provision of this section, no
person engaged in, or assets of a person engaged in, commerce
in the business of exploring for, producing, refining, or
otherwise processing, storing, marketing, selling, or
otherwise making available petroleum, products derived from
petroleum, or natural gas in any section of the United States
may be acquired by another person, if the effect of such
acquisition may be to appreciably diminish competition.''.
SEC. 4. STUDY BY THE GOVERNMENT ACCOUNTABILITY OFFICE.
(a) Definition.--In this section, the term ``covered
consent decree'' means a consent decree--
(1) to which either the Federal Trade Commission or the
Department of Justice is a party;
(2) that was entered by the district court not earlier than
10 years before the date of enactment of this Act;
(3) that required divestitures; and
(4) that involved a person engaged in the business of
exploring for, producing, refining, or otherwise processing,
storing, marketing, selling, or otherwise making available
petroleum, products derived from petroleum, or natural gas.
(b) Requirement for a Study.--Not later than 180 days after
the date of enactment of this Act, the Comptroller General of
the United States shall conduct a study evaluating the
effectiveness of divestitures required under covered consent
decrees.
(c) Requirement for a Report.--Not later than 180 days
after the date of enactment of this Act, the Comptroller
General shall submit a report to Congress, the Federal Trade
Commission, and the Department of Justice regarding the
findings of the study conducted under subsection (b).
(d) Federal Agency Consideration.--Upon receipt of the
report required by subsection (c), the Attorney General or
the Chairman of the Federal Trade Commission, as appropriate,
shall consider whether any additional action is required to
restore competition or prevent a substantial lessening of
competition occurring as a result of any transaction that was
the subject of the study conducted under subsection (b).
SEC. 5. JOINT FEDERAL AND STATE TASK FORCE.
The Attorney General and the Chairman of the Federal Trade
Commission shall establish a joint Federal-State task force,
which shall include the attorney general of any State that
chooses to participate, to investigate the information
sharing practices among persons in the business of exploring
for, producing, refining, or otherwise processing, storing,
marketing, selling, or otherwise making available petroleum,
products derived from petroleum, or natural gas, particularly
any company about which the Energy Information Administration
collects financial and operating data as part of its
Financial Reporting System.
SEC. 6. NO OIL PRODUCING AND EXPORTING CARTELS.
(a) Short Title.--This section may be cited as the ``No Oil
Producing and Exporting Cartels Act of 2006'' or ``NOPEC''.
(b) Sherman Act.--The Sherman Act (15 U.S.C. 1 et seq.) is
amended--
(1) by redesignating section 8 as section 9; and
(2) by inserting after section 7 the following:
``SEC. 8. OIL PRODUCING CARTELS.
``(a) In General.--It shall be illegal and a violation of
this Act for any foreign state, or any instrumentality or
agent of any foreign state, in the circumstances described in
subsection (b), to act collectively or in combination with
any other foreign state, any instrumentality or agent of any
other foreign state, or any other person, whether by cartel
or any other association or form of cooperation or joint
action--
``(1) to limit the production or distribution of oil,
natural gas, or any other petroleum product;
``(2) to set or maintain the price of oil, natural gas, or
any petroleum product; or
``(3) to otherwise take any action in restraint of trade
for oil, natural gas, or any petroleum product.
``(b) Circumstances.--The circumstances described in this
subsection are an instance when an action, combination, or
collective action described in subsection (a) has a direct,
substantial, and reasonably foreseeable effect on the market,
supply, price, or distribution of oil, natural gas, or other
petroleum product in the United States.
``(c) Sovereign Immunity.--A foreign state engaged in
conduct in violation of subsection (a) shall not be immune
under the doctrine of sovereign immunity from the
jurisdiction or judgments of the courts of the United States
in any action brought to enforce this section.
``(d) Inapplicability of Act of State Doctrine.--No court
of the United States shall decline, based on the act of state
doctrine, to make a determination on the merits in an action
brought under this section.
``(e) Enforcement.--The Attorney General of the United
States may bring an action to enforce this section in any
district court of the United States as provided under the
antitrust laws, as defined in section 1(a) of the Clayton Act
(15 U.S.C. 12(a)).''.
(c) Sovereign Immunity.--Section 1605(a) of title 28,
United States Code, is amended--
(1) in paragraph (6), by striking ``or'' at the end;
(2) in paragraph (7), by striking the period at the end and
inserting ``; or''; and
(3) by adding at the end the following:
``(8) in which the action is brought under section 8 of the
Sherman Act.''.
Mr. SPECTER. Mr. President, I am not introducing the bill today, but
I am putting it forward so that my colleagues may consider it and it
may be considered by the witnesses who are
[[Page S1952]]
going to be testifying before the Judiciary Committee on March 14. I am
putting it in the public view to solicit comments and to solicit
responses and ideas as to the effectiveness or propriety or
desirability of such legislation. I do so tentatively because it is a
very complicated subject, and there have been relatively few
modifications of the antitrust laws in the United States.
The basic antitrust law under which we operate is more than a century
old. The Sherman Act, enacted in 1890, made it unlawful to enter into a
contract, combination, or conspiracy in restraint of trade and
prohibited monopolization. Then, 24 years later, we enacted the Clayton
Act, which prohibits unlawful tying, corporate mergers and acquisitions
that reduce competition and interlocking directorates, which lead
principally to substantial restraint on trade. Those are the two
principal statutes that mold the antitrust laws in the United States.
There have been some additions: in 1914, the Federal Trade Commission
Act prohibiting unfair methods of competition affecting commerce; in
1936, the Robinson-Patman Act prohibiting sales that discriminate in
the price or sale of goods to equally situated distributors where the
effect of such sales is to reduce competition; in 1945, the McCarron-
Ferguson Act applying antitrust laws to the insurance industry only
``to the extent that such business is not regulated by State law;'' and
then the 1976 Hart-Scott-Rodino Act which amended the Clayton Act and
required companies to give notice to the antitrust enforcement agencies
prior to consummating a merger.
But in this long history, the principal acts have been the Clayton
Act and the Sherman Act.
There has been from time to time other legislation touching the
antitrust issues--the Soft Drink Interbrand Competition Act in 1980
permitting the owners of trademark soft drinks to grant exclusive
territorial franchises to bottlers or distributors; the local
government antitrust laws of 1984; the International Antitrust
Enforcement Assistance Act of 1994; the Standards Development
Organization Advancement Act of 2004 protecting organizations that
develop industry standards from certain types of antitrust liability;
and in 2004 the Antitrust Criminal Penalty Enhancement Reform Act.
There have been some modifications of the antitrust laws allowing the
National Football League, for example, to have revenue sharing. From
time to time, proposals have been made to limit the exemption that
baseball enjoys from the antitrust laws as a result of decisions of the
Supreme Court of the United States.
It is my concern that there ought to be some close analysis of the
existing antitrust laws with what is happening in the marketplace. The
outline of proposed legislation which I have denominated the
``Petroleum Industry Antitrust Act of 2006'' is an outline for analysis
and for further thought. Again I will say that I am not introducing it
as a bill today, but I will use it as a basis for discussion and
questioning in the Judiciary Committee hearing that will be held on
March 14.
This bill would eliminate the judge-made doctrines that prevent OPEC
members from being sued for violation of the antitrust laws by
conspiring to fix the price of crude oil. Section 1 of the bill amends
the Sherman Act prohibiting oil and gas companies from diverting,
exporting, or refusing to sell existing supplies of crude oil, refined
products, or natural gas, with the primary intent of raising prices or
creating a shortage in the market where the existing supplies are
located or intended to be shipped.
Section 2 amends the Clayton act prohibiting the acquisition of an
oil or gas company or, any assets of such a company, when the
acquisition would lessen competition. Current law allows the antitrust
agencies to challenge any acquisition that may ``substantially'' lessen
competition. This change would significantly increase the level of
scrutiny received by any large merger between competitors in the oil
and gas industry.
Section 3 requires the Government Accountability Office to evaluate
whether divestitures required by the Federal Trade Commission (``FTC'')
or the Department of Department (``DOJ'') with regard to oil and gas
industry mergers have been effective in restoring competition. Once the
study is completed, the FTC and the DOJ must consider whether any
additional steps are necessary to restore competition, including
further divestiture or the unraveling of some mergers.
Section 4 requires that the FTC and the DOJ establish a joint
federal-state task force to examine information sharing and other
anticompetitive results of recent consolidation in the oil and gas
industry.
These provisions might well be extended in a final legislative
proposal to go beyond oil and gas, but that is the thrust of what we
are considering as we prepare for the Judiciary Committee hearing on
March 14.
Again, I wish to emphasize that this is an outline of proposed
modifications to the antitrust laws. I approach it with an eye toward
the spirit of the Sherman Act and the Clayton Act, both of which have
existed for so long, but also with a sense that what is happening in
the marketplace today requires some further analysis by the Judiciary
Committee.
We are finding that the prices of heating oil are extremely high, the
price of natural gas is extremely high, the price of gasoline at the
pump is extremely high, and the American consumers and consumers beyond
America deserve some attention, they deserve to have this situation
analyzed and considered.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. THOMAS. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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