ICYMI: FTC Responds to White House Concerns; Will Crack Down on Unlawful Conduct in Oil and Gas Industry Hurting American Consumers

In a new letter to National Economic Council Director Brian Deese, Federal Trade Commission Chair Lina Khan committed to addressing illegal practices in the oil and gas industry that harm families and consumers at the pump.

Chair Khan's letter came in response to Deese's letter earlier this month, which asked the FTC to use "all of its available tools to monitor the U.S. gasoline market and address any illegal conduct that might be contributing to price increases for consumers at the pump."

Chair Khan committed the FTC to taking three specific actions: "First, I will ask that we identify additional legal theories to challenge retail fuel station mergers where dominant players are buying up family-run businesses. ... Second, I will be taking steps to deter unlawful mergers in the oil and gas industry. ... Third, I will be asking our staff to investigate abuses in the franchise market."

These actions could help lower prices for American families and workers by increasing competition in the oil and gas industry, which has experienced "significant consolidation" in recent years.

See below for coverage of the FTC letter:

Washington Post: U.S. regulator tells White House it will step up enforcement of oil and gas conglomerates
[Jeff Stein, 8/30/21]

The Federal Trade Commission plans to ramp up enforcement of anticompetitive practices by oil and gas companies, as the Biden administration presses for ways to alleviate unusually high fuel prices for motorists.

Federal Trade Commission Chair Lina M. Khan told White House National Economic Council Director Brian Deese in a memo last week that she is directing regulatory staff to ensure that the consolidation of large oil and gas firms is not leading to higher prices through "collusive practices." Khan also vowed additional steps to "deter unlawful mergers" in the oil and gas industry and investigate whether "the power imbalance favoring large national chains" force fuel station franchisees to sell gasoline at higher prices.

The directive comes as part of the White House's broader antitrust push aimed at deterring corporate consolidation in a handful of major economic sectors. Khan, an antitrust crusader, was tapped by Biden for the powerful FTC position in June.

[...]

In July, Biden signed an executive order with 72 separate directives calling on federal agencies to challenge the business practices of America's enormous technology, health care, agricultural and manufacturing firms while also aiming to shake up smaller sectors dominated by only a handful of companies, such as the hearing aid industry. White House officials have characterized the effort as a key part of their strategy to lower consumer prices. Deese is also the chair of a new competition council created by the executive order.

[...]

Bloomberg: FTC Targets Oil-and-Gas Deals, Franchises Amid Pain At Pump
[Justin Sink and David McLaughlin, 8/30/21]

• FTC's Khan vows tougher enforcement on gas station mergers

• Market is ripe for collusive practices, Khan says in letter

The Federal Trade Commission is examining ways to crack down on mergers in the oil and gas industry and investigate whether gas station franchises are driving up gas prices as part of a Biden administration effort to combat higher costs at the pump.

FTC Chair Lina Khan is directing staff to identify new legal theories to challenge retail fuel station deals and investigate possible collusion by national chains to push up prices, she said in an Aug. 25 letter to White House economic adviser Brian Deese obtained by Bloomberg News.

"I will be taking steps to deter unlawful mergers in the oil and gas industry," Khan said. "Over the last few decades, retail fuel station chains have repeatedly proposed illegal mergers, suggesting that the agency's approach has not deterred firms from proposing anticompetitive transactions in the first place."

The FTC is planning to ratchet up investigations into abuses in the retail fuel station franchise market, she added.

"We will need to determine whether the power imbalance favoring large national chains allows them to force their franchisees to sell gasoline at higher prices, benefitting the chain at the expense of the franchisee's convenience store operations," Khan said.

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Reuters: FTC to crack down on gasoline price manipulation, 'unlawful' U.S. oil industry mergers
[Jeff Mason, 8/30/21]

The Federal Trade Commission will crack down on practices that may harm consumers at the gasoline pump and seek to deter "unlawful" mergers in the oil and gas industry, FTC Chair Lina Khan told the White House in a letter last week.

The letter, obtained by Reuters, was addressed to White House economic adviser Brian Deese and promised to start an investigation of abuses in the "franchise market" for retail fuel stations, among other steps.

Deese, in an initial Aug. 11 letter to Khan, had asked the FTC to investigate why "gas prices tend to rise more quickly to adjust to spikes in oil prices than they fall when the price of oil declines."

Khan replied: "I am especially interested in ways that large national chains may 'restore' higher prices through collusive practices, and I will direct our staff to investigate any signs of this type of conduct."

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Axios: Federal Trade Commission to probe gas station mergers as prices climb
[Andrew Freedman, 8/30/21]

The head of the Federal Trade Commission, Lina Khan, told the White House in a letter released Monday that she plans to probe mergers of retail gasoline stations in order to avert potentially anti-competitive behavior that could drive up the cost of gas, according to a letter obtained by Axios.

Driving the news: The letter indicates Khan will act on a request White House National Economic Council director Brian Deese made earlier this month.

• Deese had requested that the FTC examine trends in gasoline prices for potentially unlawful conduct.

Details: In the letter, Khan writes, "I am concerned that the Commission's approach to merger review in recent years has enabled significant consolidation, particularly when it comes to retail fuel outlets."

• Such consolidation, Khan states, may be raising the price of gas at the pump.

[...]