[Congressional Record (Bound Edition), Volume 155 (2009), Part 1]
[Senate]
[Page 534]
[From the U.S. Government Publishing Office, www.gpo.gov]




               NO OIL EXPORTING AND PRODUCING CARTELS ACT

  Mr. SPECTER. Mr. President, as our economy sinks further into 
recession, OPEC, which controls about 40 percent of the world oil 
supplies, has announced its biggest single production cut ever. As a 
result, since December 17 when the cartel announced its record 
production cuts, oil prices have risen 40 percent.
  For decades, the members of OPEC have conspired to manipulate oil 
prices by limiting the number of barrels sold. U.S. antitrust laws 
explicitly prohibit conspiracies in restraint of trade, which include 
agreements to cut production in an effort to cause prices to rise. 
Cartel activity by OPEC members clearly violates U.S. antitrust laws.
  Unfortunately, OPEC members have escaped liability for their 
antitrust violations. The Foreign Sovereign Immunities Act makes 
foreign states liable under U.S. law for their commercial activities 
but not their governmental activities. In International Association of 
Machinists v. OPEC, a California district court held that OPEC's cartel 
activity was governmental activity, not commercial activity, and was 
therefore immune from the antitrust laws. On appeal, the Ninth Circuit 
affirmed.
  These court decisions were wrong. Government-owned companies engaged 
in purely business activities are subject to the antitrust laws.
  That is why Senator Kohl and myself as well as nine other cosponsors 
are reintroducing the No Oil Producing and Exporting Cartels Act, or 
NOPEC. The legislation reverses these court decisions, making it clear 
that cartel activity OPEC is commercial activity that is subject to the 
antitrust laws. NOPEC also makes it clear that OPEC members are subject 
to the jurisdiction of U.S. courts.
  Applying antitrust law to foreign conduct is consistent with current 
law. In Hartford Fire Insurance Co. v. California, the Supreme Court 
held that U.S. courts have jurisdiction over antitrust suits involving 
foreign conduct by foreign actors if the conduct has substantial 
effects in the United States. Clearly, OPEC's cartel activities have 
substantial effects in the United States.
  The Justice Department has over the years prosecuted many foreign 
cartels in a myriad of industries, including vitamins, marine hose, 
liquid crystal display panels, textiles, construction, food, chemicals, 
graphite electrodes, ocean shipping and fine arts auctions. Indeed, 
over the past decade, around half of the corporate defendants in cartel 
cases brought by the Justice Department have been foreign-based. In the 
vitamins case, for example, the Justice Department successfully 
prosecuted a cartel of foreign vitamin manufacturers that held meetings 
abroad to allocate market share and set prices--just like OPEC. In many 
of the cases involving foreign cartels, foreign executives have been 
extradited to the U.S. to serve significant prison sentences.
  Critics have argued that NOPEC would harm U.S. relations abroad or 
discourage foreign investment in the United States. However, NOPEC 
leaves the decision to prosecute OPEC members in the hands of the 
executive branch by giving the Justice Department sole authority to 
prosecute.
  NOPEC enjoys strong bipartisan support and has since its first 
introduction back in 2000. The Senate Judiciary Committee has 
unanimously passed NOPEC on four separate occasions, most recently on 
May 22, 2007. During the 109th Congress, the legislation passed the 
Senate by a vote of 70 to 23 as an amendment to the Clean Energy Act. 
It was stripped out in conference. NOPEC passed the House last year by 
an overwhelming vote of 345 to 72. The bill even has the support of the 
conservative Heritage Foundation, which has noted that NOPEC ``would 
place much needed pressure on OPEC.''

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