DealLawyers.com Blog

Remember when the FTC wouldn’t let Exxon Mobil move forward with its acquisition of Pioneer Natural Resources unless the company agreed not to honor a commitment to put Pioneer’s founder on Exxon’s board?  Well, they did it again last week – this time imposing a similar condition on Chevron’s acquisition of Hess. As this excerpt from a LegalDive.com article on the FTC’s action notes, that decision didn’t sit well with the two Republican commissioners:

In a pair of scathing dissents, the Federal Trade Commission’s two Republican-appointed commissioners accused the agency of operating a pay-for-peace racket by forcing Chevron and Hess Corp. to agree to settlement terms that would never withstand court scrutiny.

In the settlement, Chevron agreed to keep Hess CEO John Hess off its board in exchange for the agency’s sign-off on its merger proposal. The FTC in its complaint said Hess needs to stay off the board because of his vocal support for the Organization of Petroleum Exporting Countries restricting output to keep oil prices high.

“The Commission leveraged its Hart-Scott-Rodino Act authority by threatening to hold up Chevron and Hess’s $53 billion dollar merger even though the lack of a plausible Section 7 [of the Clayton Antitrust Act] theory had long been obvious,” FTC Commissioner Andrew Ferguson said in his dissent.

Commissioner Ferguson went on to accuse the FTC of taking the action in order to placate “Democratic politicians who have repeatedly and publicly urged the Commission to block this merger in order to advance their climate agenda.” Commissioner Holyoak echoed his accusations in her own dissenting statement, and also noted that claims of a potential Section 7 violation were particularly suspect given that “[t]he combined Chevron-Hess Corporation entity will control two percent of the global oil market. A reduction in its output would hardly remove a drop from the metaphorical bucket.”

– John Jenkins