Energy Markets: Analysis of More Past Mergers Could Enhance Federal Trade Commission's Efforts to Maintain Competition in the Petroleum Industry
Highlights
During the late 1990s, many petroleum companies merged to stay profitable while crude oil prices were low, and in recent years mergers have continued. Congress and others have concerns about the impact mergers might be having on competition in U.S. petroleum markets. The Federal Trade Commission (FTC) has the authority to maintain competition in the petroleum industry and reviews proposed mergers to determine whether they are likely to diminish competition or increase prices, among other things. GAO was asked to examine (1) mergers in the U.S. petroleum industry and changes in market concentration since 2000 and (2) the steps FTC uses to maintain competition in the U.S. petroleum industry, and the roles other federal and state agencies play in monitoring petroleum industry markets. In conducting this study, GAO worked with petroleum industry experts to delineate regional markets and to develop estimates of refinery gasoline production capacity in order to calculate market concentration. GAO used public and private data as well as interviews for its analyses.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Federal Trade Commission | To enhance FTC's effectiveness in maintaining competition in the U.S. petroleum industry, and to make efficient use of FTC's resources, the FTC Chairman should lead efforts to conduct more regular retrospective analyses of past petroleum industry mergers. |
FTC agreed that regular retrospective merger reviews would allow the agency to better inform future merger reviews and to better measure its success in maintaining competition. As of April 2010, FTC completed an additional retrospective analysis of a petroleum industry merger. In addition, FTC has begun initial work on two more retrospective analyses and will continue conducting such reviews as staff time permits.
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| Federal Trade Commission | To enhance FTC's effectiveness in maintaining competition in the U.S. petroleum industry, and to make efficient use of FTC's resources, the FTC Chairman should lead efforts to develop risk-based guidelines to determine when to conduct them. |
In September 2012, FTC official said that they are currently using risk-based guidelines to determine when to conduct retrospective analyses and are currently formalizing these guidelines in writing.
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