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Specter to look at oil industry antitrust Consolidations concern chairman of Senate Judiciary Committee, who calls for Congress to look at modifying antitrust laws H. Josef Hebert Associated Press Writer
The chairman of the Senate Judiciary Committee said Feb. 1 he wants to take a close look at possibly changing antitrust laws to better police oil industry consolidation.
Sen. Arlen Specter, R-Pa., noted that the Federal Trade Commission has approved thousands of mergers in the industry over the past 15 years, creating huge companies, perhaps to the detriment of consumers.
“It is time the Congress took a very serious look at modifying the antitrust laws” in light of such consolidation, Specter told reporters after a hearing on industry’s market concentration.
One of the agency’s five commissioners, William Kovacic, said most parts of the industry “generally remain unconcentrated or moderately concentrated” despite increased consolidation in some oil production since the mid-1990s.
The growth of independent companies, he said, “has increased competition at the wholesale and retail levels in many areas” of the industry.
Companies’ immense profits at the time of high energy costs for consumers have brought renewed attention on the impact of industry consolidation on oil markets.
Just this week, Exxon Mobil Corp., the world’s largest publicly traded oil company, reported it earned more than $36 billion last year, the largest annual reported net income of any company in U.S. history. Kovacic: FTC analyzes each merger Kovacic said the FTC analyzes each merger with an intent of protecting consumers against market abuses. Connecticut’s attorney general, Richard Blumenthal, told senators that the emergence of such large companies has left consumers “at the mercy of increasing prices and unnerving market volatility.”
Blumenthal said the government’s “lax and lackluster enforcement of antitrust laws has led to an explosion of mergers in the oil industry.” He said there have been more than 2,500 oil company mergers in the past 15 years.
After the hearing, Specter said there might be a need for some changes in antitrust law and that his staff was working on proposals that could be introduced this year.
Blumenthal mentioned refocusing the burden of proof about compliance on the oil companies, rather than on merger foes, and examining whether current penalties against abuses are adequate.
The American Petroleum Institute, which represents large oil companies, said in a statement to the committee that the FTC has “thoroughly analyzed” each of the large oil company mergers since 1981 and required “significant divestitures” to maintain competition before approving them.
“Any allegation that the federal government has been lax in its oversight ... is simply not credible,” according to the institute.
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