[Congressional Record (Bound Edition), Volume 152 (2006), Part 3]
[Senate]
[Pages 3219-3223]
[From the U.S. 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.
       (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

[[Page 3220]]

     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.
       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

[[Page 3221]]

     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 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

[[Page 3222]]

     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 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

[[Page 3223]]

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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