Apr 2, 2024 - Energy & Environment

Antitrust enforcement gets bipartisan love — except for oil deals

Illustration of an oil rig under a spotlight

Illustration: Natalie Peeples/Axios

Antitrust enforcement has become bipartisan, with Democrats and Republicans locking hands to oppose mergers in such areas as tech, airlines, and grocery.

  • But there is one giant exception: energy.

Driving the news: Thirty-eight GOP senators last week sent a letter to FTC chair Lina Khan, arguing against Democrats' request for antitrust action on oil and gas mergers, Axios Pro's Jael Holzman scoops.

  • Sen. Ted Cruz (R-Texas) and Senate Minority Leader Mitch McConnell (R-Ky.) are the letter's first two signers.
  • It appears to be specifically aimed at heading off FTC action on a pair of proposed $60 billion mergers: ExxonMobil/Pioneer and Chevron/Hess.

Zoom in: The letter argues that producers should be viewed in a global context, whereby U.S. giants like ExxonMobil and Chevron hold relatively small market share.

  • The letter adds that the FTC has no business considering how mergers could impact climate change, as Democrats assert, but should view increased production as a net positive for consumers.
  • Finally, the Republicans indirectly raise the specter of the "major questions" doctrine, which could thwart antitrust action in an area that Congress hasn't explicitly authorized the FTC to regulate.

Reality check: The FTC under former President Trump successfully blocked a mega-merger between U.S. coal producers Peabody Energy and Arch Resources.

The big picture: Energy has been one of the M&A market's bright spots, including a recent boom in shale deals.

  • LSEG reports that "energy and power" was the second-busiest sector for deals in Q1 2024, with aggregate value rising 48% year-over-year.
  • Just this morning, oilfield services firm SLB agreed to buy smaller rival ChampionX for $7.75 billion in stock.

The bottom line: This political fissure could spark even more energy mergers, with companies believing there is an open lane for approval, even if it's relatively narrow.

Go deeper: Debate grows among experts over merging America's merger regulators

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