Sean Heather Sean Heather
Senior Vice President, International Regulatory Affairs & Antitrust, U.S. Chamber of Commerce


March 13, 2024


With the political pressure of an election year upon us, we will see whether the Federal Trade Commission (FTC) succumbs to “progressive” forces trying to derail American competitiveness. Currently testing the FTC’s independence from political pressures are several pending oil and gas mergers. 

In two multibillion-dollar deals announced last year, ExxonMobil plans to purchase Pioneer Natural Resources, while Chevron is acquiring Hess Corporation. Last month, two other companies announced another large merger, and several smaller deals are pending as well. The FTC, of course, should evaluate the mergers based on any evidence of potential effects on competition, including price, output, and investment. However, time will tell whether the agency attempts to veer from the law to advance a more politically motivated agenda.

Analyzing the Merits of Mergers

Global Competition: Given their nature, these mergers appear to raise few competitive risks. Though these are all large companies, they operate in a very competitive global market with numerous players and with virtually no ability to extract monopoly prices. In the U.S. alone, roughly 9,000 independent companies produce about 83% of domestic oil. Even after the merger, ExxonMobil would only produce about 5% of U.S. oil. Yearly oil and gas mergers and acquisitions now constitute a small fraction, only 3%, of the industry’s market capitalization. This is not a highly concentrated market, at home or around the world.

Expanded Output and Investment: These mergers help offer an assurance of continued security of supply as they carry the potential to expand output and investment. Oil exploration and development requires massive capital outlays, particularly given this administration’s stringent regulatory environment, while rising interest rates have increased the cost of capital for smaller companies. 

The mergers would give the combined companies more resources and opportunities to explore untapped reserves and bring new supplies to the market. Scale empowers companies to efficiently use the best technologies and techniques, such as horizontal drilling methods, across vast expanses of land. Chevron has stated that the combined company is expected to increase production in the Gulf of Mexico, North Dakota’s Bakken shale formation, and the coastal waters of Guyana. As a result, these and other mergers could improve the security of America’s energy supply chain, which benefits not only American consumers but also U.S. strategic allies around the world.

Politics at Play  

Unfortunately, some progressive senators are inserting themselves into a typically apolitical process by encouraging the FTC to evaluate these mergers based on political and even self-contradictory criteria rather than objective evidence of their competitive merits. Acknowledging that the firms “represent a small fraction of the global petroleum market,” this handful of senators expressed concern that the mergers would increase output and, therefore, exports, supposedly leaving less oil available to American consumers, even though oil is openly traded, meaning that greater supply translates into lower prices at home.

Similarly, these senators speculated that the merged companies somehow could foreclose their distribution networks from smaller producers, even though, again, oil is a commodity, and both companies profit when other producers use their networks. In short, none of these progressive antitrust arguments hold up to logical scrutiny — but they do, at best, demonstrate a continued lack of understanding among some of our nation’s legislators about how global markets actually function.

Even more troubling, the senators encourage the FTC to veer outside of its lane by analyzing the mergers based on factors other than their competitive impact. They assert that “[a]t a time when Americans overwhelmingly support governmental efforts to clean up the environment and protect our nation from climate disasters, Exxon and Chevron are doubling down on fossil-fuel production.”

The FTC should not reject a merger that would increase output in favor of some amorphous environmental goal; Chair Khan herself rejected tying antitrust to environmental, social, and corporate governance factors. It’s a slippery slope that could ultimately threaten the basic foundation of the limited role of merger review. Similarly, the senators assert that the “proposed transactions would augment these corporations’ outsized political power.” This troubling suggestion would subvert decades of Supreme Court precedent and bipartisan enforcement efforts that divorced antitrust law from political considerations.

If regulators move to block a merger, they should do so only based on strong evidence that the merger would reduce competition rather than bowing to election-year political considerations. Precedent, policy, and the rule of law itself demand that the FTC evaluate mergers on the merits of whether they will increase output and investment. 

About the authors

Sean Heather

Sean Heather

Sean Heather is Senior Vice President for International Regulatory Affairs and Antitrust.

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