II 

109TH CONGRESS 

2D SESSION S. 2854 

To prevent anti-competitive mergers and acquisitions in the oil and gas 

industry. 

IN THE SENATE OF THE UNITED STATES 

MAY 18, 2006 

Mr. KOHL (for himself and Mr. DEWINE) 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 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Oil Industry Merger 

5 Antitrust Enforcement Act’’. 

6 SEC. 2. STATEMENT OF FINDINGS AND DECLARATIONS OF 

7 PURPOSES. 

8 (a) FINDINGS.—Congress finds the following: 


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1 (1) American consumers are suffering from ex2 cessively high prices for gasoline, natural gas, heat3 ing oil, and other energy products. 

4 (2) These excessively high energy prices have 

5 been caused, at least in substantial part, by undue 

6 concentration among companies involved in the pro7 duction, refining, distribution, and retail sale of oil, 

8 gasoline, natural gas, heating oil, and other petro9 leum-related products. 

10 (3) There has been a sharp consolidation 

11 caused by mergers and acquisitions among oil com12 panies over the last decade, and the antitrust en13 forcement agencies (the Federal Trade Commission 

14 and the Department of Justice Antitrust Division) 

15 have failed to employ the antitrust laws to prevent 

16 this consolidation, to the detriment of consumers 

17 and competition. This consolidation has caused sub18 stantial injury to competition and has enabled the 

19 remaining oil companies to gain market power over 

20 the sale, refining, and distribution of petroleum-re21 lated products. 

22 (4) The demand for oil, gasoline, and other pe23 troleum-based products is highly inelastic so that oil 

24 companies can easily utilize market power to raise 

25 prices. 


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1 (5) Maintaining competitive markets for oil, 

2 gasoline, natural gas, and other petroleum-related 

3 products is in the highest national interest. 

4 (b) PURPOSES.—The purposes of this Act are to— 

5 (1) ensure vigorous enforcement of the antitrust 

6 laws in the oil industry; 

7 (2) restore competition to the oil industry and 

8 to the production, refining, distribution, and mar9 keting of gasoline and other petroleum-related prod10 ucts; and 

11 (3) prevent the accumulation and exercise of 

12 market power by oil companies. 

13 SEC. 3. BURDEN OF PROOF. 

14 Section 7 of the Clayton Act (15 U.S.C. 18) is 

15 amended by adding at the end the following: 

16 ‘‘In any civil action brought against any person for 

17 violating this section in which the plaintiff— 

18 ‘‘(1) alleges that the effect of a merger, acquisi19 tion, or other transaction affecting commerce may be 

20 to substantially lessen competition, or to tend to cre21 ate a monopoly, in the business of exploring for, pro22 ducing, refining, or otherwise processing, storing, 

23 marketing, selling, or otherwise making available pe24 troleum, oil, or natural gas, or products derived 

25 from petroleum, oil, or natural gas; and 


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1 ‘‘(2) establishes that a merger, acquisition, or 

2 transaction is between or involves persons competing 

3 in the business of exploring for, producing, refining, 

4 or otherwise processing, storing, marketing, selling, 

5 or otherwise making available petroleum, oil, or nat6 ural gas, or products derived from petroleum, oil, or 

7 natural gas; 

8 the burden of proof shall be on the defendant or defend9 ants to establish by a preponderance of the evidence that 

10 the merger, acquisition, or transaction at issue will not 

11 substantially lessen competition or tend to create a monop12 oly.’’. 

13 SEC. 4. ENSURING FULL AND FREE COMPETITION. 

14 (a) REVIEW.—The Federal Trade Commission and 

15 the Antitrust Division of the Department of Justice shall 

16 jointly review and revise all enforcement guidelines and 

17 policies, including the Horizontal Merger Guidelines 

18 issued April 2, 1992 and revised April 8, 1997, and the 

19 Non-Horizontal Merger Guidelines issued June 14, 1984, 

20 and modify those guidelines in order to— 

21 (1) specifically address mergers and acquisi22 tions in oil companies and among companies in23 volved in the production, refining, distribution, or 

24 marketing of oil, gasoline, natural gas, heating oil, 

25 or other petroleum-related products; and 


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1 (2) ensure that the application of these guide2 lines will prevent any merger and acquisition in the 

3 oil industry, when the effect of such a merger or ac4 quisition may be to substantially lessen competition, 

5 or to tend to create a monopoly, and reflect the spe6 cial conditions prevailing in the oil industry de7 scribed in subsection (b). 

8 (b) SPECIAL CONDITIONS.—The guidelines described 

9 in subsection (a) shall be revised to take into account the 

10 special conditions prevailing in the oil industry, includ11 ing— 

12 (1) the high inelasticity of demand for oil and 

13 petroleum-related products; 

14 (2) the ease of gaining market power in the oil 

15 industry; 

16 (3) supply and refining capacity limits in the oil 

17 industry; 

18 (4) difficulties of market entry in the oil indus19 try; and 

20 (5) unique regulatory requirements applying to 

21 the oil industry. 

22 (c) COMPETITION.—The review and revision of the 

23 enforcement guidelines required by this section shall be 

24 completed not later than 6 months after the date of enact25 ment of this Act. 


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1 (d) REPORT.—Not later than 6 months after the date 

2 of enactment of this Act, the Federal Trade Commission 

3 and the Antitrust Division of the Department of Justice 

4 shall jointly report to the Committee on the Judiciary of 

5 the Senate and the Committee on the Judiciary of the 

6 House of Representatives regarding the review and revi7 sion of the enforcement guidelines mandated by this sec8 tion. 

9 SEC. 5. DEFINITIONS. 

10 In this Act: 

11 (1) OIL INDUSTRY.—The term ‘‘oil industry’’ 

12 means companies and persons involved in the pro13 duction, refining, distribution, or marketing of oil or 

14 petroleum-based products. 

15 (2) PETROLEUM-BASED PRODUCT.—The term 

16 ‘‘petroleum-based product’’ means gasoline, diesel 

17 fuel, jet fuel, home heating oil, natural gas, or other 

18 products derived from the refining of oil or petro19 leum. 

Æ 


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