Journal of World Energy Law and Business, 2016, 9, 411–423
doi: 10.1093/jwelb/jww031
Article
The Intersection of Energy and Competition
Law in the USA
Thomas D Fina*
ABSTRACT
1. INTRODUCTION
The USA enacted the first modern competition laws in the world. The Sherman Act, the first and still the primary US antitrust statute, was enacted to break up ‘trusts’ (essentially, large, dominate conglomerates) like
the Standard Oil Company created by industry magnate John D Rockefeller. Standard Oil was a vertically
and horizontally integrated exploration and production (E&P) company, and the dominant energy company
in both the USA and the world in the late 1800s and early 1900s. The company controlled over 37 oil and
gas companies in the USA and, at one point, over 90 per cent of the world’s refining capacity.1
Widespread public concern over the concentration of vast wealth and power in the hands of huge
trusts that were controlled by a few families2 prompted both political parties to incorporate antitrust ‘planks’
* Thomas D Fina is a partner in Baker Botts LLP’s antitrust practice and the head of the firm’s antitrust practice in Texas. Much of his practice is energy and merger and acquisition focused. Mr Fina, and Baker Botts’ antitrust practice, represented Halliburton in its proposed acquisition of Baker Hughes Incorporated. He has guided hundreds of transactions through the merger review process in the USA and abroad
and appeared before numerous competition authorities outside of the USA. Nathan Chubb, an antitrust associate at Baker Botts, has spent
the majority of his career focused on oil and gas industry mergers and advised on Halliburton’s proposed acquisition of Baker Hughes
Incorporated. Before joining Baker Botts, Mr Chubb was an attorney at the FTC, where he conducted numerous reviews of midstream and
downstream energy transactions. Email: [email protected]
1 Grant Segall, John D. Rockefeller: Anointed with Oil (2001) 67. At one point, Standard Oil was estimated to hold over 50 per cent of the
world’s supply of oil. In the late 1870s Standard Oil employed over 100,000 people, owned over 20,000 wells and owned or operated 4000
miles of pipeline and 5000 rail cars. Ron Chernow, Titan: The Life of John D. Rockefeller, Sr. (Vintage 1998) 249.
2 Standard Oil was largely held by four families until its breakup in 1911. Chernow (n 1) 291. Many of these families invested in other, similar
trusts. Eliot Jones, The Trust Problem in the United States (Macmillan 1921) passim.
C The Authors 2016. Published by Oxford University Press on behalf of the AIPN. All rights reserved.
V
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The Sherman Act, with its origin in the Populist and Progresive eras, was enacted to break up ‘trusts’
like the Standard Oil Company, a vertically and horizontally integrated exploration and production
company. Over 100 years later, the DOJ challenged the proposed merger of Halliburton and Baker
Hughes, two oil-field services companies. The government feared that the merger would potentially
raise prices of servces provided by these companies to E&P companies, which are some of the largest corporations in the world and include many direct descendants of Standard Oil. Energy is of
great importance to the US economy. As a result, it is closely scrutinized by the US antitrust agencies-the Department of Justice and Federal Trade Commission. This article summarizes US antitrust
laws and their origins, describes recent changes in the oil and gas industry, explains how those
changes have influenced the enforcement articles of the DOJ and FTC, reviews the current industry
and antitrust trends, identifies likely enforcement activity in the near future and discusses the potential effect of the US’s 2016 Presidential election on antitrust enforcement.
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2. ORIGINS AND OVERVIEW OF US ANTITRUST LAW
Antitrust and populism
Antitrust laws in the USA have always been informed by an element of populism.6 John Sherman, for whom
the primary US antitrust statute is named, said:
If we will not endure a king as a political power, we should not endure a king over the production,
transportation, and sale of any of the necessaries of life. [If w]e would not submit to an emperor, we
should not submit to an autocrat of trade.7
America’s first antitrust law was passed in 1890, the height of the populist movement in America and a time
of considerable farmer and working class antipathy towards big industry and societal elites. Populism, with its
agrarian roots, gave way to Progressivism, a reform movement with a more metropolitan base that believed
the problems facing society (poverty, child labour and poor working conditions, among others) could be addressed with education, a safe environment, and rational government regulation in the economic sphere.
During the Progressive Era in the USA, from around 1900–17, the federal government actively intervened in
3 Examples include ExxonMobil, BP (through the acquisition of several Standard Oil companies) and Chevron.
4 Deborah Feinstein, Remarks of Deborah Feinstein Antitrust in Healthcare Conference, American Bar Association, May 12-13, 2016:
Arlington, Virginia, USA.
5 Both agencies have units devoted to investigating activity and mergers in the energy sector. The FTC’s Mergers III division focuses on
downstream oil and gas mergers and practices, including market and price manipulation in the petroleum futures market. The DOJ’s
Transportation, Energy and Agriculture section focuses on mergers in E&P, OFS, electric power generation and transmission and nuclear
power generation and transmission.
6 Historically, populism in the USA was an agrarian, anti-elitist reform movement, fueled by discontent with crop failures, falling prices for
crops and expensive railroad transportation for agricultural products. Some populist causes were later embraced by the Progressives, a reform movement which reached its height at the turn of the 20th century in response to economic and social problems caused by rapid industrialization in the USA. Today, the term ‘populism’ is used broadly and invoked by right wing groups such as the Tea Party and left
wing groups such as Occupy Wall Street.
7 Eric Holder, ‘Attorney General Eric Holder Speaks at the Sherman Act Award Ceremony’ (2010) Department of Justice <https://www.just
ice.gov/opa/speech/attorney-general-eric-holder-speaks-sherman-act-award-ceremony> accessed 14 August 2016.
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(or positions) into their respective 1888 Presidential platforms and led to Congress enacting the Sherman
Act in 1890. In 1906, the Department of Justice (DOJ) brought a key antitrust lawsuit against the Standard
Oil Company, alleging monopolization. In 1911, the US Supreme Court held that Standard Oil had, in fact,
violated the Sherman Act and the behemoth was split into 34 separate companies. This marked the beginning
of the end of the era of the trusts.
Over 100 years later, the DOJ challenged the proposed merger of Halliburton and Baker Hughes, two oilfield services (OFS) companies. The government feared that the merger would potentially raise prices of services provided by these companies to E&P companies, which are some of the largest corporations in the
world and include many direct descendants of Standard Oil.3 DOJ’s challenge would likely have been inconceivable at the time the Sherman Act was passed, but today even the largest corporations are protected by
the antitrust laws in the USA.4
Energy is of great importance to the US economy, representing between 5 and 10 per cent of the US gross
domestic product. As a result, it is closely scrutinized by the US antitrust agencies—the DOJ and Federal
Trade Commission (FTC).5 This article presents an overview of the intersection of antitrust and energy in
the USA. Section II summarizes US antitrust laws and their origins. Section III describes recent changes in
the oil and gas industry, while Section IV explains how those changes have influenced the enforcement activities of the DOJ and FTC. Section V reviews current industry and antitrust trends. Finally, Section VI identifies likely enforcement activity in the near future and discusses the potential effect of the USs’ 2016
Presidential election on antitrust enforcement.
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Sherman Act section 1
While individual states within the USA enforced common law prohibitions on anti-competitive practices before the Sherman Act,14 the Sherman Act represented the first-federal attempt to proscribe anti-competitive
behaviour.15 Section one of the Sherman Act states that, ‘[e]very contract, combination in the form of trust
or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign
8 While there is some current debate whether a total welfare standard is a more appropriate measuring stick, courts have historically focused
on consumer welfare. Roger D Blair and D Daniel Sokol, ‘Welfare Standards in U.S. and E.U. Antitrust Enforcement’ (2013) 81 Fordham
L Rev 2497, 2499 (‘[W]e believe that it is total welfare rather than consumer welfare that should drive antitrust analysis.’).
9 Robert H Bork, The Antitrust Paradox (Free Press 1978) 20, 50–71.
10 Sandeep Vaheesan, ‘The Evolving Populisms of Antitrust’ (2014) 93 Neb LR 370.
11 ‘U.S. Enforcers Respond to Critics From All Sides’ Global Competition Review, 21 September 2016.
12 Acting Assistant Attorney General Renata Hesse of the Antitrust Division Delivers Opening Remarks at 2016 Global Antitrust
Enforcement Symposium, The Conference was at Georgetown University, Washington D.C., USA on Sept. 20, 2016 <https://www.just
ice.gov/opa/speech/acting-assistant-attorney-general-renata-hesse-antitrust-division-delivers-opening> accessed 14 October 2016.
13 ibid.
14 15 USC ss 1–7.
15 Phillip Areeda and Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application (2016) s 101.
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the economy, breaking up trusts, and regulating railroads and other industries. The previous laissez-faire approach to economic affairs was deemed to no longer be an acceptable option, as the growth of unregulated
big businesses had brought about abuses of corporate power. Once monopolies and trusts were established,
progressives argued that consumers, farmers and small businessmen were often forced to accept high prices
and inferior products and service.
Notably, Theodore Roosevelt became president in 1901. Roosevelt was a champion of the Progressive
Era, and his signal ‘Square Deal’ domestic policies promised the average citizen fairness, ‘trust-busting’ antitrust enforcement, regulation of railroads and pure food and drugs. This included DOJ’s successful challenge
to, and breakup of, the Standard Oil Company.
As a consequence, US competition law has elements of both populism and progressivism. The statutes are
designed to protect consumers against the unchecked abuses of ‘big business’. To protect consumers,8
Congress sought to preserve competition between firms.9 The ideology that ‘when businesses make war, consumers win’ underlies even early expressions of Congressional intent in enacting antitrust legislation.
As populist sentiment has ebbed and flowed in the USA, so too has interest in antitrust enforcement. This
has been reflected in enforcement trends and the receptiveness of the courts to the agencies’ arguments.10 In
the 1880s and 1890s through the start of World War I, the question of how government would deal with the
trusts dominating the US economy was at the forefront of political discourse. By the early 1980s, however,
both political parties in the USA had broadly accepted general antitrust principles, and enforcement did not
vary substantially depending on the party in power.
In 2016, however, populist sentiment is surging again, reflected in the Presidential political campaigns of
Republican nominee Donald Trump and Democratic contender Bernie Sanders, as well as political movements like the Tea Party movement on the right and the Occupy Wall Street movement and Senator
Elizabeth Warren on the left. Senator Warren, a progressive Democrat representing Massachusetts, has suggested that antitrust enforcement has floundered in recent decades, including during the Obama
Administration, and needs reinvigoration.11 Members of Congress, ‘think tank’ reports and newspaper ‘opeds’ have raised the alarm about mergers and increasing concentration in the US economy.12 The revival of
populism as a force in US politics, and the outcome of the 2016 President election, could affect antitrust enforcement in the USA in a way that has not been seen recent decades. ‘Antitrust is making headlines again,
and I don’t just mean in antitrust publications,’ stated the head of the Antitrust Division of the Department
of Justice in a recent speech.13
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Intersection of energy and competition law
nations, is declared to be illegal.’16 But, as noted in Standard Oil Company of New Jersey v United States,17
every contract restrains trade to some degree. Acknowledging that a strictly literal interpretation of the
Sherman Act was unworkable, the court in Standard Oil Company of New Jersey concluded that only unreasonable restraints should be considered unlawful.
This rule of reason generally governs US antitrust jurisprudence, with the exception of restraints deemed
to lack any pro-competitive justification—labelled ‘naked restraints’,—which are generally considered per se
illegal. If the elements of a per se illegal activity are demonstrated, a defendant can be found guilty of violating
the Sherman Act without consideration of the intent or the effect of the activity. Examples of per se violations
are bid rigging and price fixing.18
Clayton Act section 7
In 1914, Congress passed the Clayton Act to clarify and strengthen antitrust enforcement. While the government had won several notable cases under the Sherman Act, including breaking up Standard Oil and other
trusts,20 the Sherman Act had various weaknesses, including ambiguity with respect to several practices, unintended application to labour unions and the inability to prevent anti-competitive mergers.21 Because of these
shortcomings, remedial antitrust legislation was a focus of popular political discourse in the 1900s and 1910s,
culminating in the passage of the Clayton Act, through which Congress added teeth to American antitrust
jurisprudence.22
Of particular relevance to the energy industry, section 7 of the Clayton Act was designed to prevent anticompetitive mergers and other business combinations that would lessen competition. Mergers where ‘the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly’ were
declared unlawful.23 The section 7 gave the DOJ and FTC the power to prospectively challenge mergers on
behalf of the government, rather than requiring the agencies to wait until a transaction closed before challenging it.24
19
16
17
18
19
20
21
22
23
24
25
26
27
15 USC s 1.
221 US 1 (1911). cf U.S. v Joint Traffic Ass’n (1898) 84 US 505; N. Sec. Co. v U.S. (1904) 193 US 197.
Department of Justice, U.S. Antitrust Resource Manual (2016) s 8.
15 USC ss 12–27.
221 US 1 (1910).
See Bork (n 9) 34. Later, Isabel Paterson would describe the Sherman Act by saying, ‘[a]s freak legislation, the antitrust laws stand alone.
Nobody knows what it is they forbid.’ Ioannis Kokkoris and Rodrigo Olivares-Caminal, Antitrust Law Amid Financial Crisis (2010) 1.
The Clayton Act established that price discrimination, certain tying and exclusive dealings, mergers which tended to substantially lessen
competition, and horizontal interlocking directorates are antitrust violations.
15 USC s 18.
ibid.
And often still are. See eg In the Matter of Evanston Northwestern Healthcare Corporation, FTC Docket No 9315 (Rosch op, 2008) (confirming an antitrust violation but refusing to order divestiture of assets).
ibid.
15 USC s 18a.
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Hart–Scott–Rodino Antitrust Improvements Act of 1976, as amended (‘HSR Act’)
Although section 7 of the Clayton Act granted federal enforcement agencies clear authority to challenge anticompetitive mergers, the DOJ and FTC continued to have a difficult time stopping unlawful mergers before
closing. Ex post remedies were often unfulfilling,25 as competition was rarely fully restored.26 ‘Unscrambling
the eggs’ post-closing is, at best, a difficult task. Consequently, in 1976 Congress passed the HSR Act27 to establish a pre-merger notification system that gave the antitrust enforcement agencies an opportunity to review and, if necessary, challenge transactions before they closed.
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28 These figures are updated annually based on the consumer price index.
29 FTC, Premerger Form and Instructions <https://www.ftc.gov/enforcement/premerger-notification-program/form-instructions> accessed
14 August 2016.
30 ibid.
31 Alternatively, parties to transactions unlikely to create competitive harms may request ‘early termination’ of the HSR waiting period.
32 One of the significant and fundamental differences between the US merger review process and the merger review process in the EU is that
the US process is ‘back loaded’ with respect to the provision of data and documents, while the EU process is ‘front loaded’ with respect to
the provision of data and documents. Thus, under the US HSR process, parties to a proposed transaction can notify their transaction to
the antitrust agencies on their time schedule. Complying the data and documents required by a HSR filing typically requires a party approximately two weeks, and the filing does not require any substantive data or antitrust analysis. To the extent that DOJ or the FTC (depending on which agency is reviewing the proposed transaction) wants additional documents and data about the transaction, it issues a
subpoena to the parties (discussed further). In contrast, in the EU merger review process, parties typically draft lengthy Form CO filings
which contain a great deal of substantive antitrust analysis and data, and may go through several draft Form CO filings and reviews with
European Community staff before the filing is accepted for review.
33 FTC, Model Request for Additional Information and Documentary Materials (Second Request) (2010).
34 ibid.
35 See generally, Nathan Chubb, ‘Agency Draw: How Serious Questions in Merger Review Could Lead to Enhanced Merger Enforcement’
(2011) 18 Geo Mason L Rev 533. Recent efforts have been taken to align the two standards. See eg Judiciary Committee, House of
Representatives, ‘House Judiciary Committee Approves SMARTER Act to Deliver Predictability to the Merger Review Process’ (2015)
<https://judiciary.house.gov/press-release/house-judiciary-committee-approves-smarter-act-to-deliver-predictability-to-the-merger-re
view-process/> accessed 14 August 2016.
36 In the USA, less than 6 per cent of all transactions filed involved a target operating in the energy or natural resources industries.
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Overview of the HSR merger review process
Parties to mergers valued above a specified threshold28 must follow prescribed notification and approval procedures before closing.29 The merging parties must submit filings containing information and documents about
the transaction30 and must wait a minimum of 30 days before closing to allow the DOJ and FTC the opportunity to review the transaction.31 Each party submits its own notification form, which provides a description of
the transaction and breaks the party’s revenues down by government-issued industrial product and service classification codes. The filings must also include certain types of documents prepared by the parties analysing the
transaction with respect to competition. However, the filings do not require any substantive antitrust analysis.32
Before the expiry of the initial 30-day waiting period, the investigating agency may issue a Request for
Additional Information and Documentary Materials, referred to as a ‘Second Request’, which is a subpoena
for an extraordinarily broad range of data and documents. 33The breadth of the government’s concerns about
a potential transaction and the number of product markets implicated in its investigation largely determines
scope of a second request. Depending on the government’s concerns, parties may be able to narrow and
focus a second request, reducing the burden of compliance. Complying with a Second Request generally is a
major undertaking, and can require the production of millions of documents and vast amounts of data, detailed written responses to agency questions, and, sometimes, depositions of company executives.
Compliance can cost millions or tens of millions of dollars and require from four to eight months or longer.
Managing the Second Request process efficiently and effectively is critical to enhancing the likelihood of the
merger being approved.
Once both parties to a proposed merger have substantially complied with the Second Request, the government has 30 additional days to determine whether to attempt to block the transaction.34 In practice, however,
the agencies typically require the merging parties to enter into a ‘timing agreement’ that provides the reviewing agency substantially more time to conduct its investigation.
To block a transaction, the agency must seek a preliminary injunction through the federal courts. The
FTC arguably faces a lighter burden in court than its DOJ counterpart in this regard.35 As a result, the
‘agency draw’ can make a difference in the ultimate outcome of a merger.
As a practical matter, few transactions filed with the government36 are reviewed in depth or challenged.
Table 1 below shows that in the 2015 Fiscal Year, fewer than three per cent of the HSR-filed transactions
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Intersection of energy and competition law
Table 1. HSR filing statistics
Transactions Reported
Matters in which Second Requests were issued
Number of matters challenged or in which remedies were negotiated
Fiscal Year 2015
Fiscal Year 2014
1801
47
42
1663
51
33
Information Source: Hart–Scott–Rodino Annual Report for Fiscal Year 2015
received Second Requests. Once a Second Request is issued, the odds of a remedy being required or the
agencies filing a challenge in court are high.
3. INDUSTRY CHANGES—THE BOOM OF UNCONVENTIONAL SHALE DEVELOPMENT
The US energy industry has undergone an enormous transformation in recent years. In the 1990s, landbased oil and gas reservoirs in the USA that could be economically developed using traditional techniques
were in decline,39 forcing E&P companies to seek new exploration and production opportunities. Many of
the major oil companies re-focused on offshore and overseas targets, whereas some others, particularly small
to mid-sized US E&P companies, worked to develop new technologies for exploiting known, but to that
point uneconomic, hydrocarbon shale formations.
The combination of advances in horizontal drilling technology and hydraulic fracturing (‘fracking’)—a
technology which itself was first developed in the 1800s and had been available in substantially its current
form since the 1950s—brought new life to US oil production. 40
These complementary technologies enabled E&P companies to drill long horizontal wells in narrow,
dense shales, and access significant volumes of hydrocarbons trapped in them,41 leading to a resurgence in
US oil production.42 US production steadily increased until, in 2014, the USA became the world’s largest pro-
37 15 USC ss 41–58.
38 Only FTC can enforce the FTC Act and, in particular, its section 5 powers.
39 EIA, U.S. Field Production of Crude Oil <http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n¼PET&s¼MCRFPUS2&f¼A> accessed
14 August 2016.
40 For a fuller discussion of the origins of fracking, see generally, Russell Gold, The Boom: How Fracking Ignited the American Energy
Revolution and Changed the World (2015).
41 Eg Dennis Dimick, ‘How Long can the U.S. Oil Boom Last’ National Geographic (Dec 19, 2014).
42 At one point, it was estimated that over 90 per cent of newly drilled wells were fracked. Ian Urbina, ‘Regulation Lax as Gas Wells’ Tainted
Water Hits Rivers’ New York Times (Dec 19, 2011).
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Both the DOJ and FTC have merger enforcement jurisdiction
When the FTC Act was enacted in 1914,37 Congress created overlapping jurisdiction between the DOJ and
FTC for enforcement of the Sherman and Clayton Acts.38 As a result, the US federal antitrust system has
‘competition’ between the DOJ and FTC.
To prevent duplicative investigations, the agencies typically allocate mergers reviews based on their respective historical experience with certain industries. For transactions in the areas of electric power generation and transmission, as well as nuclear power, the DOJ will generally conduct the review. The FTC
generally reviews mergers in the biofuels and coal sectors. Responsibility for review of transactions in the
petroleum-related industries is split between the agencies. Typically, the DOJ reviews mergers in the upstream market, such as for E&P and OFS companies. The FTC has established experience in reviewing midstream and downstream sector mergers, such as those involving companies in the gathering, refining and
distribution business.
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417
ducer of oil and natural gas liquids.43 In that period, hydrocarbon production reached ‘nearly 11 million barrels per day—an increase of 3 million barrels per day since 2011 alone’,44 and an approximate 150 per cent
increase from the low point in 2008.45 Commenters noted that ‘the burgeoning U.S. oil and gas industry was
experiencing growth unseen since the 1970’s, all while prices stayed remarkably stable (and high)’.46
As previously unexploited shale formations first began to be developed, attractive acreage was affordable and readily available. As fresh acreage was exploited, new E&P and OFS companies were formed at
an astonishing rate to serve the burgeoning production. By way of example, based on industry counts, at
least 100 new OFS companies have been established in the USA since 2011. These new entrants have
emerged in all segments of the upstream oil and gas industry. Many of these companies grew quickly in
local or regional basins, and subsequently expanded or merged to form new national competitors to the
well-established major E&P and OFS companies. Competition for acreage in the area of these reservoirs,
and correspondingly the prices for acquiring such acreage, increased in parallel with these
developments.47
DOJ’s recent energy activity
Historically, the DOJ has been active in enforcing the antitrust laws in the energy sector. As noted above,
from the earliest days of antitrust regulation in the USA, the DOJ was focused on the oil trusts and Standard
Oil. Over time, the DOJ’s enforcement activity has shifted from breaking up trusts to preventing potentially
harmful mergers and prosecuting bid rigging.
DOJ merger review
The proliferation of E&P companies in the USA and worldwide has created a highly competitive industry.
Consolidation in this area has not garnered much DOJ interest, in large part because DOJ has generally considered the E&P market to be global in scope. To the extent that either agency has reviewed mergers between E&P companies, it has been the FTC focusing on the downstream assets of these companies—
refineries, terminals and retail distribution (gas stations).48
While the DOJ has not recently challenged E&P mergers, the same cannot be said for mergers of OFS
companies. These companies provide a range of products and services, such as drill bits, directional drilling,
well completion tools and services, cementing, wireline services, well intervention and well plugging and
abandonment services, among numerous others.
The DOJ has closely reviewed OFS mergers in recent years, particularly among companies that operate in
the Gulf of Mexico. The DOJ has generally taken the position that transactions involving companies which
provide products and services offshore, and particularly in deep water, are the most problematic, because
there are the fewest number of competitors and highest barriers to entry in this sector. In contrast, the DOJ
has been less concerned about the provision of products and services on land, where there conversely tend to
be more competitors and lower barriers to entry.
43 ibid.
44 ibid.
45 In September 2008, US crude oil field production averaged 3,980,000 barrels per day. This figure does not include natural gas liquids. EIA,
‘U.S. Field Production of Crude Oil’ <http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n¼PET&s¼MCRFPUS2&f¼A> accessed
14 August 2016.
46 Urbina (n 42).
47 Eg Allied-Horizontal started operations in 2010. In 2014, it merged with Horizontal Wireline, another recent startup. By 2015, the merged
companies were estimated to be the fifth largest wireline services provider in the USA.
48 Eg the FTC investigated Exxon’s merger with Mobil, Chevron’s merger with Texaco, and Conoco’s merger with Phillips.
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4. APPLICATION OF COMPETITION LAW IN THE ENERGY SECTOR
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DOJ bid rigging investigations
Bid rigging is a criminal violation of section 1 of the Sherman Act, punishable by prison sentences of up to
10 years, US$1 million in individual fines, and US$100 million in corporate fines.55 The development of unconventional shales in the USA, and the concomitant increase in bidding for mineral rights on federal, state
and private land, has increased the number of federal and state investigations into allegations of bid rigging.
While the total number of investigations is unknown due to confidentiality protections, it is clear that federal
and state authorities currently have a number of ongoing investigations.
In 2014, the DOJ reviewed potential bid rigging between Chesapeake Energy and Encana in land lease
auctions in Michigan.56 Chesapeake and Encana had engaged in discussions regarding a potential Michiganbased joint venture (JV). In the process, Chesapeake and Encana allegedly agreed not to compete on certain
acreage bids. The JV never materialized, leading to a DOJ and Michigan Attorney General (AG) investigation. While the DOJ ultimately closed its investigation,57 the Michigan AG filed civil antitrust charges against
both companies and criminal antitrust charges against Chesapeake. The companies ultimately settled with
the AG for a combined US$30 million.58
49 Halliburton, ‘Halliburton and Baker Hughes Reach Agreement to Combine in Stock and Cash Transaction Valued at $34.6 Billion’ (2014)
<http://www.halliburton.com/public/news/pubsdata/press_release/2014/HAL-BHI-Joint-Announcement-Press-Release.pdf> accessed 14
August 2016.
50 ‘DOJ Files Antitrust Lawsuit Against Halliburton’ (2016) Competition Pol Intl <https://www.competitionpolicyinternational.com/usdoj-files-antitrust-lawsuit-against-halliburton/> accessed 14 August 2016.
51 Leslie Picker, ‘Halliburton and Baker Hughes Call Off $35 Billion Merger’ New York Times (May 2, 2016).
52 Department of Justice, ‘Justice Department Requires Divestiture in Merger of Ecolab Inc. and Permian Mud Service Inc.’ (2013)
<https://www.justice.gov/opa/pr/justice-department-requires-divestiture-merger-ecolab-inc-and-permian-mud-service-inc> accessed 14
August 2016.
53 ibid.
54 Department of Justice, ‘Justice Department Requires Divestitures in Baker Hughes’ Merger with BJ Services’ (2010) <https://www.just
ice.gov/opa/pr/justice-department-requires-divestitures-baker-hughes-merger-bj-services> accessed 14 August 2016.
55 The fines may be increased above the maximum in rare circumstances to twice the gain or loss involved in the activities.
56 ‘Chesapeake, Encana Face Criminal Antitrust Charges in Michigan’ CNBC(2014) <http://www.cnbc.com/2014/03/06/> accessed 14
August 2016.
57 Mohid Ahmed, ‘Chesapeake Energy Corporation (CHK) To Pay $25 Million As Settlement For Michigan Lease Charges’ BidnessEtc
(2015) <http://www.bidnessetc.com/41040-chesapeake-energy-corporation-chk-to-pay-25-million-as-settlement-for-michi/> accessed
14 August 2016.
58 ibid. Chesapeake’s settlement included settlement of non-antitrust charges as well.
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The most recent example of DOJ’s aggressive enforcement posture is reflected in the challenge of
Halliburton Company’s attempt to acquire Baker Hughes Incorporated. The $34 billion dollar deal was
announced in November 2014.49 The DOJ investigated the proposed transaction for almost 17 months, ultimately filing a complaint in federal district court challenging the proposed transaction. The complaint
alleged 23 potential violations, most of which focused on a Gulf of Mexico geographic market.50 The DOJ rejected Halliburton’s proposal to address the alleged problems through divestitures, and the parties ultimately
abandoned the transaction.51
While the DOJ challenged the proposed Halliburton–Baker Hughes merger, the DOJ has permitted some
other mergers in offshore OFS markets, subject to divestitures and other remedies. In 2013, the DOJ permitted Ecolab to purchase Permian Mud Services after Ecolab agreed to divest certain assets providing chemicals
used in deep water oil production in the Gulf of Mexico.52 Without the the required divestiture, the companies would have had a 70 per cent offshore market share in anti-freezing/clumping additives for oil.53 The
DOJ also permitted Baker Hughes’s acquisition of BJ Services in 2010, subject to the divestiture of certain
pressure pumping assets and two vessels in the US Gulf of Mexico.54
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419
The DOJ also investigated a potential Chesapeake conspiracy with SandRidge Energy in Oklahoma in
2015.59 From December 2007 to March 2012, Chesapeake allegedly conspired with SandRidge to rig bids for
oil and gas acreage in Northwest Oklahoma.60 The DOJ filed criminal charges against Aubrey McClendon,
Chesapeake’s CEO.61 Mr McClendon died in a car accident shortly thereafter, but the investigation into
Chesapeake is ongoing.62
In 2012, the DOJ concluded an investigation into bid rigging activities between Gunnison Energy and SG
Interests in Colorado.63 The DOJ filed a civil antitrust complaint after the companies jointly bid for acreage
in connection with a pipeline JV, alleging the companies’ began coordinating on bid prices before a JV had
been formed.64 The companies ultimately settled with the DOJ for US$550,000.65
FTC’s refinery and terminal enforcement—bulk supply markets
There have been few major US refinery mergers in recent years. The last FTC challenge to a refinery merger
was its unsuccessful 2007 attempt to block Western Refining’s acquisition of Giant Industries, a transaction
between two New Mexico refiners. Since Western Giant, there have been several refinery acquisitions, including PBF Energy’s acquisition of assets in Pennsylvania, Ohio, Louisiana and California; Tesoro’s acquisition
of refining assets in the central and western states; and HollyFrontier’s acquisition of refining positions in
Tulsa, Oklahoma.67 Many of these mergers were non-reportable under the HSR Act or were filed but not
investigated,68 while others did not raise competitive concerns.69 Tesoro’s acquisition of BP’s refinery alone
59 Department of Justice ‘Former CEO Indicted for Masterminding Conspiracy Not to Compete for Oil and Natural Gas Leases’ (2016)
<https://www.justice.gov/opa/pr/former-ceo-indicted-masterminding-conspiracy-not-compete-oil-and-natural-gas-leases> accessed 14
August 2016.
60 ibid.
61 ibid. See also, Steve Sisney ‘Former Chesapeake CEO Charged With Land Lease Rigging’ Reuters (2016) <http://www.foxbusiness.com/
markets/2016/03/01/former-chesapeake-ceo-charged-with-land-lease-rigging.html> accessed 14 August 2016.
62 Matt Egan and Jackie Wattles ‘Ex-Chesapeake CEO Aubrey McClendon Dead After Car Crash’ CNN (2016) <http://money.cnn.com/
2016/03/02/news/chesapeake-ceo-dead-aubrey-mcclendon-car-crash/index.html> accessed 14 August 2016.
63 Department of Justice ‘Justice Department Settlement Requires Gunnison Energy and SG Interests to Pay the United States a Total of
$550,000 for Antitrust and False Claims Act Violations’ (2012) <https://www.justice.gov/opa/pr/justice-department-settlement-re
quires-gunnison-energy-and-sg-interests-pay-united-states> accessed 14 August 2016.
64 ibid.
65 ibid.
66 Gasoline prices often receive significant attention from politicians in the USA. As a result, Congress has put various mandates on the FTC regarding observing and investigating the petroleum industry. Congress has required the FTC to develop a rule and investigate market manipulation in the petroleum financial market. The agency conducted the Petroleum Industry Pricing and Practices Investigation to investigate alleged
market manipulation in the gasoline market, but has not prosecuted any violations. Similarly, Congress has requested several investigations
into the price of retail gasoline after disruptive events led to price spikes in petroleum products. For example, the FTC investigated retail gasoline prices in the South after Hurricane Katrina and retail gasoline prices in the Northwest after several price spikes. See, eg FTC ‘Report of
the Federal Trade Commission on Activities in the Oil and Gas Industries’ (2008) <https://www.ftc.gov/sites/default/files/documents/re
ports/report-federal-trade-commission-activities-oil-and-natural-gas-industries/p082108semiannenergyreport.pdf> accessed 14 August 2016.
Crude and gasoline prices as well as the refining process are also frequent topics of economists at the FTC. See, eg Matthew Chesnes ‘The
Impact of Outages on Prices and Investment in the US Oil Refining Industry’ (2014) Working Paper No 322 <https://www.ftc.gov/system/
files/documents/reports/impact-outages-prices-investment-us-oil-refining-industry/wp322.pdf> accessed 14 August 2016.
67 See, EIA ‘Refinery Genealogy’ <http://www.eia.gov/finance/genealogy/pdf/genealogy_refiners.pdf> accessed 14 August 2016.
68 While sustained high oil prices and were a boon to E&P and OFS companies, public reports suggest refinery profitability was squeezed
due to high input costs, particularly for refineries reliant upon the light sweet crudes and foreign supply.
69 Eg, Delta Airlines acquired a refinery in Pennsylvania. More recently, PBF’s acquisition of the Torrance refinery in California did not raise
competitive concerns, as none of PBF’s other refineries sold products into California.
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FTC’s recent energy activity
The FTC has historically exercised the federal government’s antitrust merger jurisdiction with respect to midstream and downstream petroleum assets. The agency has been active in the last five years, requiring remedies in several matters, including energy markets not typically investigated.66
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Intersection of energy and competition law
FTC’s pipeline and distribution enforcement
The FTC has been active in the review of midstream and downstream assets, particularly oil and gas pipelines. This is due, in large part, to the increase of master-limited partnership (MLP) investment structures.
MLPs provide several advantages to investors; in particular, they combine the tax benefits of partnerships
with the liquidity of publically traded stock.78 Oil and natural gas pipelines qualify for MLP treatment and
generally have relatively consistent income flows that are attractive to MLP investors.
The increase in MLPs in the pipeline industry has led to significant merger and acquisition activity, and
the FTC has actively reviewed these transactions. In 2012, the FTC negotiated a remedy in Kinder Morgan’s
acquisition of El Paso, a transaction between two national pipeline companies. Kinder Morgan’s acquisition
of El Paso consolidated two largely complementary interstate and intrastate natural gas pipeline systems that
had a considerable overlap in the Rocky Mountains.79 The FTC required Kinder Morgan to divest its
70 FTC, ‘FTC Closes Investigation into Tesoro’s Acquisition of BP Refinery’ (2013) <https://www.ftc.gov/news-events/press-releases/
2013/05/ftc-closes-investigation-tesoros-acquisition-bp-refinery> accessed 14 August 2016.
71 ibid. The deal was termed a 7 to 7 as BP’s Northwest assets were likely considered capable of providing refined products into the West
Coast geographic market.
72 FTC, ‘FTC Approves Final Order Settling Charges That Irving Oils Acquisition of ExxonMobil Assets in Maine Was Anticompetitive’
(2011) <https://www.ftc.gov/news-events/press-releases/2011/07/ftc-approves-final-order-settling-charges-irving-oils-acquisition> accessed 14 August 2016.
73 FTC, ‘FTC Requires Energy Investor ArcLight Energy Partners Fund to Divest Assets as a Condition of Acquiring Gulf Oil Limited
Partnership from Cumberland Farms, Inc.’ (2015) <https://www.ftc.gov/news-events/press-releases/2015/12/ftc-requires-energy-in
vestor-arclight-energy-partners-fund-divest> accessed 14 August 2016.
74 FTC, ‘FTC Approves Final Order Settling Allegations That Tesoro’s Acquisition of Chevron Petroleum Assets Was Anticompetitive’ (2013)
<https://www.ftc.gov/news-events/press-releases/2013/08/ftc-approves-final-order-settling-allegations-tesoros-acquisition> accessed 14 August 2016.
75 FTC, ‘FTC Approves Final Order Preserving Competition for Bulk Volumes of Hawaii-grade Gasoline Blendstock’ (2015) <https://www.
ftc.gov/news-events/press-releases/2015/05/ftc-approves-final-order-preserving-competition-bulk-volumes> accessed 14 August 2016.
76 ibid.
77 Similarly, the relevant analysis in Tesoro’s acquisition of BP’s southern California refinery was the bulk supply of CARB gasoline and other
light petroleum products.
78 Eg see Baker Botts’ website at < http://www.bakerbotts.com/services/practice-areas/corporate/master-limited-partnerships-mlp>
accessed 14 October 2016.
79 FTC, ‘FTC Requires Kinder Morgan to Sell Rocky Mountain Pipelines as a Condition of Acquiring El Paso Corporation’ (2012) <https://
www.ftc.gov/news-events/press-releases/2012/05/ftc-requires-kinder-morgan-sell-rocky-mountain-pipelines> accessed 14 August 2016.
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in Los Angeles received an in-depth investigation of the recent refinery mergers.70 The transaction was ultimately cleared without conditions, largely due to the existence of excess capacity and the fact that the acquisition did not result in a structural market change.71
Downstream transactions have resulted in several investigations and divestitures. Terminal acquisitions
are particularly susceptible to competitive problems, often due to their geographical isolation and associated
logistical challenges. Irving Oil’s acquisition of BP’s terminal assets in Maine,72 ArcLight Energy’s acquisition
of Gulf Oil terminals from Cumberland Farms in Pennsylvania,73 and Tesoro’s acquisition of terminals from
Chevron in Idaho74 have all required remedies to preserve competition in each relevant geographic market.
One approach by which the FTC has expanded its enforcement activity is by defining a ‘bulk supply’ product market. Rather than defining the market based on the particular asset (eg refinery, pipeline or terminal),
the bulk supply product market is based on the ability to provide refined products to the market in volumes
larger than a truckload. This has allowed the FTC to pursue competitive overlaps in what may otherwise appear to be vertical mergers, such as Par Petroleum’s (Par) recent acquisition of the MidPac Terminals. Par
acquired MidPac’s terminals which distributed refined products in Hawaii.75 However, because MidPac was
capable of self-supplying through imported cargos, and redistributing those volumes throughout Hawaii, the
FTC identified a horizontal overlap.76 Par ultimately divested MidPac’s interest in the import-capable terminal as a condition to closing the merger.77
Intersection of energy and competition law
421
Rockies Mountain Express pipeline, as well as additional pipelines and assets, to remedy its concerns about
decreased competition that would otherwise result from the transaction.80 More recently, the FTC cleared
another transaction between national pipeline operators—Energy Transfer’s acquisition of the Williams
Companies—subject to Energy Transfer divesting an interest in a new natural gas pipeline serving Florida.81
At least two other pipeline mergers were investigated recently but closed with no further action. These
were Magellan’s acquisition of Plains All American crude oil pipeline assets in the Rockies82 and Hilcorp’s acquisition of Marathon’s natural gas processing, storage and transmission assets in Alaska.83
80 ibid.
81 FTC, ‘FTC Puts Conditions on Merger of Energy Transfer Equity, L.P., and The Williams Companies, Inc.’ (2016) <https://www.ftc.
gov/news-events/press-releases/2016/06/ftc-puts-conditions-merger-energy-transfer-equity-lp-williams> accessed 14 August 2016.
82 Magellan Midstream Partners, L.P. / Plains All American Pipeline, L.P., Docket No 1310109 (19 September 2013) <https://www.ftc.
gov/enforcement/cases-proceedings/closing-letters/magellan-midstream-partners-lp-plains-all-american> accessed 14 August 2016.
83 FTC, ‘FTC Closes Its Investigation Into Hilcorp Alaskas Proposed Acquisition of Marathon Alaskas Natural Gas Production,
Transmission, and Storage Assets’ (2012) <https://www.ftc.gov/news-events/press-releases/2012/11/ftc-closes-its-investigation-hilcorpalaskas-proposed-acquisition> accessed 14 August 2016.
84 There are many competitive forces affecting gathering pipelines, such as each well requiring a dedicated line, the quality of the connected
processing and refining assets and the destination markets available to the processing and refining assets. Gathering in the USA is presumed to have little effect on the price of finished products. Furthermore, once a pipeline is extended to a well, it is normally cost prohibitive to switch suppliers, meaning that the timeframe to compete to supply gathering lines is generally narrow. The FTC has looked at
gathering in the past, however. In 2000, the FTC required divestiture in Duke’s acquisition of Phillips gathering assets, and in 2002,
Conoco was required to divest gathering assets as part of its acquisition of Phillips. ‘Duke, Phillips Resolve FTC Concerns’ (2000)
MarketWatch <http://www.marketwatch.com/story/duke-phillips-resolve-ftc-concerns> accessed 14 August 2016; FTC Docket No
0210004, In the Matter of Conoco, Inc. and Phillips Petroleum Company <https://www.ftc.gov/enforcement/cases-proceedings/0210040/phillips-petroleum-co-conoco-inc> accessed 14 August 2016. Both divestitures were part of larger deals.
85 Regency Energy Partners LP/Eagle Rock Energy Partners, LP, Docket No 1410070 (26 June 2014) <https://www.ftc.gov/enforcement/
cases-proceedings/closing-letters/regency-energy-partners-lpeagle-rock-energy-partners> accessed 14 August 2016.
86 Generally, retail gasoline prices are largely determined by the prices associated with gasoline and services sold higher in the distribution
stream, such as dealer tankwagon prices and other spot prices at terminals.
87 Re AmeriGas and Blue Rhino, FTC Matter No 111-0195, Docket No 9360 (2015) <https://www.ftc.gov/enforcement/cases-proceed
ings/111-0195/amerigas-blue-rhino-matter> accessed 14 August 2016.
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FTC’s gathering and distribution enforcement
Oil and gas gathering pipelines are closely related to transmission pipelines. Unlike downstream assets, which
transport refined product from the processing plant or refinery to market, gathering lines collect oil and natural gas from wells and transport it to refineries or processing plants.
Historically, the FTC has paid little attention to the gathering market.84 However in 2013, the FTC investigated Regency’s acquisition of Eagle Rock’s gas gathering assets. Regency had recently acquired PVR, a
competing gas gathering and processing company, creating overlaps in Texas and Oklahoma. While the FTC
ultimately closed its investigation without challenging the transaction,85 the investigation sent the signal that
the agency was developing an interest in gas gathering mergers it had not expressed in over 10 years.
Similarly, the FTC has generally not analysed purely retail transactions, particularly in retail gasoline.86
However, the FTC recently investigated several retail distribution transactions, including the proposed mergers of Pilot and Flying J (diesel sold to long-haul trucking fleets), and of AmeriGas and Blue Rhino (retail
propane distribution). The FTC’s review of Pilot’s acquisition of Flying J, two competing retail truck stop
chains, led to an eventual remedy which required the sale of 26 travel locations or ‘truck stops’ which provided diesel, among other services, to long-haul trucking fleets. In 2012, the FTC blocked Blue Rhino’s attempted acquisition of AmeriGas, two of the primary bulk propane distributors, for fear that the combined
companies could raise prices post-transaction. Shortly thereafter, the FTC investigated an alleged agreement
between the companies to reduce fill levels in propane cylinders, ultimately obtaining a conduct remedy from
the companies.87
422
Intersection of energy and competition law
5. LOOKING TO THE FUTURE
Industry changes—the oil decline through 2015
Global oil prices started to decline in late 2014, then plummeted through 2015 until appearing to bottom out
in February 2016. During that time, the price of West Texas Intermediate (WTI) crude oil, perhaps the most
important US benchmark crude, fell from US$107 per barrel in June 2014 to just over US$26 per barrel in
February 2016, a roughly 75 per cent price decrease.88 Several factors likely contributed to the oil bust,
including the abundance of shale oil in the USA, logistics changes into and out of Cushing, Oklahoma where
the WTI price is set,89 weakening USA and global demand, and OPEC’s unwillingness to cut production levels. However, the US antitrust agencies see energy as a cyclical business, and merging parties do not get
‘credit’ for excess capacity in downturns.
6. PREDICTIONS AND CONCLUSIONS
Eight years ago, then-Senator Barack Obama and Senator John McCain barreled towards an election at the beginning of a deepening recession. During his campaign, Obama promised more robust antitrust enforcement,
particularly with respect to mergers.90 Several times he stated that he would ‘step up’ antitrust enforcement
after, what he considered, the ‘weakest record of antitrust enforcement of any administration [referring to the
Bush Administration] in the last half century’.91 However, in the economic tumult of the Great Recession, the
Obama Administration quietly shelved its plans for stricter antitrust enforcement. It was well into the current
economic recovery before the administration’s actions matched the ‘get tough’ rhetoric of candidate Obama.92
More recently, however, the DOJ and FTC have been particularly aggressive in merger review, challenging
more than twice as many mergers in the past seven years as President Bush’s enforcers challenged in the previous eight years.93 With the exception of some recent hospital mergers,94 both the DOJ and FTC have been successful in challenging transactions in federal court, and such success begets more challenges. As the Acting
Assistant Attorney General of the Antitrust Division recently noted, ‘[a]ntitrust enforcers at the Antitrust
88 EIA, ‘Cushing, OK WTI Spot Price FOB’ <http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n¼pet&s¼rwtc&f¼d> accessed 10
July 2016.
89 Eg ‘Seaway Crude Line Reversal Completed’ (2012) 239 Pipeline & Gas J 7; TransCanada, ‘Gulf Coast Project Begins Delivering Crude
Oil to Nederland, Texas’ (2014) <http://www.transcanada.com/announcements-article.html?id¼1800856> accessed 14 August 2016.
90 For a general discussion of popular perception of the robustness of antitrust enforcement in the USA in recent years, see D Daniel Sokol
‘Antitrust, Institutions, and Merger Control’ (2010) 17 Geo Mason L Rev 1.
91 Senator Barack Obama, ‘Statement for the American Antitrust Institute’ (2007) <http://www.antitrustinstitute.org/files/aai%20Presidential%20campaign%20-%20Obama%209-07_092720071759.pdf> accessed 14 August 2016.
92 See, eg John Taladay and others, ‘President Obama Orders Federal Agencies to Further Ramp Up Antitrust Oversight’ (2016) Baker
Botts < http://www.bakerbotts.com/ideas/publications/2016/04/antitrust-update-president-obama> accessed 14 August 2016.
93 Kirk Victor and Claude R. Marx, ‘Warren v. Baer: Two Tales of Antitrust Enforcement’ (2016) FTC Watch (‘In seven-plus years of the
Obama administration, we successfully challenged or secured the abandonment of 39 mergers - a dramatic increase from the 16 successful
challenges or abandonments during the eight years of the previous administration.’).
94 In these hospital transactions, the primary issue is typically geographic market definition.
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Some recovery and consolidation
As a recovery appears to begin, our experience suggests a merger ‘snowball’ effect. The initial wave of consolidation may not raise significant competition concerns. Some of these transactions are occurring now.
Instead, it is often the second or third transaction in a sector that is viewed as potentially more problematic
and thus undergoes more extensive review. At that point, fewer competitors remain, increasing concentration
in the relevant market. Fewer targets often means the second wave of consolidation is more complicated, as
there are more overlaps and fewer complementary acquisition targets. As consolidation continues, companies
afraid of being ‘left out’ of the merger wave must consider increasingly risky acquisitions, or become targets
themselves.
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423
95 Acting Assistant Attorney General Renata Hesse of the Antitrust Division Delivers Opening Remarks at 2016 Global Antitrust
Enforcement Symposium <https://www.justice.gov/opa/speech/acting-assistant-attorney-general-renata-hesse-antitrust-division-de
livers-opening>.
96 See Hesse (n 12).
97 ibid.
98 Hillary Clinton, ‘Clinton Announces Technology Platform’ (2016) <http://www.mlex.com/GlobalAntitrust/DetailView.aspx?
cid¼807853&siteid¼191&rdir¼1> accessed 14 August 2016.
99 Leah Nylan ‘Democrats Add Antitrust Back Into Party Platform, Endorsing Greater Enforcement’ (2016) MLex, <http://www.mlex.
com/GlobalAntitrust/DetailView.aspx?cid¼812718&siteid¼191&rdir¼1> accessed 14 August 2016. Specifically, the party plank states,
in part:
We will make competition policy and antitrust stronger and more responsive to our economy today, enhance the antitrust enforcement arms of the Department of Justice (DOJ) and the Federal Trade Commission (FTC), and encourage other agencies
to police anti-competitive practices in their areas of jurisdiction. We support the historic purpose of the antitrust laws to protect competition and prevent excessively consolidated economic and political power, which can be corrosive to a healthy democracy. We support
reinvigorating DOJ and FTC enforcement of antitrust laws to prevent abusive behavior by dominant companies, and protecting
the public interest against abusive, discriminatory, and unfair methods of commerce. (emphasis added).
100 Specifically, the platform states: ‘We propose repealing the 1945 McCarran-Ferguson Act which protects insurance companies from antitrust litigation.’
101 Since this article was submitted for publication, Donald Trump was elected as the next President of the United States. While Mr. Trump
has made few comments regarding his stance on antitrust and competition matters, he recently appointed former FTC Commissioner
Joshua Wright as the lead of his antitrust transition team. Commissioner Wright, who holds a law degree and doctorate in economics, is
known to prefer the rigorous application of economic principles to competition matters. It is expected that President-elect Trump will
direct the DOJ and FTC to adhere to a more restrained application of the antitrust laws than currently applied by the Obama
administration.
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Division and the FTC have become justifiably more skeptical about the promise of procompetitive benefits of
mergers and of the likelihood that remedies solve the competitive concerns. As a result, we are more and more
litigating to challenge mergers we see as fundamentally problematic and difficult, if not impossible, to fix.’95
Where populists and pundits on the one hand and the US antitrust agencies on the other hand have split,
however, is over the goals of the antitrust laws. For the populists and many pundits, concentration in and off
itself is problematic, ‘big is bad’, and the antitrust agencies should challenge transactions that result in additional concentration. This is a view that both the Antitrust Division and the FTC reject out of hand.96 Size
alone, and levels of concentration alone are not problematic; the antitrust agencies are concerned with transactions that create, enhance or protect ‘market power’ (essentially monopoly power) by anti-competitive
means.97
While the political winds are impossible to predict, it is reasonable to expect that the populist sentiment
articulated by both parties’ candidates for President will likely maintain momentum in the USA, and may
manifest itself in the antitrust enforcement agenda of the new Administration. Hillary Clinton has signalled
her desire to continue the recent aggressive enforcement levels.98 For the first time in 20 years, the
Democrats have added antitrust principles to the party’s primary statement of policies and values.99 While
Donald Trump has not expressly opined on antitrust issues and is perceived as more likely to adopt business
friendly policies, the Republican Party’s policy plank adopted at the Republican Convention nominating
Donald Trump includes at least one expansion of antitrust enforcement.100 Regardless of the outcome of the
race for the White House, the seeming resurgence of populist sentiment in the USA is likely to exert pressure
on the DOJ and FTC to continue aggressive enforcement, including in the energy industry.101