Testifying today before the House Commerce Committee's Subcommittee on Energy and Power regarding recent nationwide oil price fluctuations, Richard Parker*, Director of the Federal Trade Commission's Bureau of Competition, stressed the need for federal and state coordination in responding to such increases, and said that "continued antitrust oversight of the affected markets is necessary to ensure that the current situation is not exacerbated through anticompetitive conduct" within the industry.
Citing the FTC's extensive experience in the area of antitrust regulation concerning the United States' oil and gas industries, Parker said that while other factors such as production decreases and the particularly cold January in the Northeast likely contributed to increased demands for petroleum products, "there are a number of potential [anticompetitive] activities that if left unchecked could contribute to an increase in prices."
"The potential is always present for producers, refiners, or distributors to take advantage of sudden market imbalances to engage in anticompetitive conduct in the hope that their illegal activities will be lost in all the noise," he said. Examples of behavior that could potentially violate federal laws include price fixing, tying or agreements between companies on supply reductions. "For example," Parker said, "if producers take advantage of market-determined events to overtly or tacitly collude on price increases or output reductions, the enforcement agencies should aggressively intervene."
He stressed, however, that while "a closer look is warranted where there is evidence of tacit collusion," it is crucial to separate anticompetitive conduct from market-driven outcomes "so as not to chill competitive conduct." That is, large price increases are not themselves inconsistent with competitive behavior, and may in fact merely be a competitive reaction to large cost increases. "Without evidence of concerted activity or exclusionary monopoly conduct," Parker said, "there can be no antitrust violation."
In concluding his remarks, Parker specifically referred to an investigation by the Attorneys General of the U.S.'s northeastern states -- in which the FTC is assisting -- into increased regional prices for heating oil and diesel fuel. This investigation, he said, "should enable use to determine if the reasons for recent increases in the price of heating oil warrant enforcement action."
"The American public needs to know what forces are at work in this vital sector of the economy," he stressed. "Higher prices for products that are critical to our citizens' quality of life and for the efficient functioning of the national economy are a matter of serious concern. Where conduct that violates the antitrust laws is implicated in the higher prices, enforcement action must be taken."
The Commission vote to approve the testimony and submit a prepared copy for the record was 4-0, with Commissioner Thomas B. Leary recused.
NOTE: The testimony mentioned in this release, along with the release itself, is available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
*The information in this release, as well as that in Richard Parker's prepared statement represent the views of the Federal Trade Commission. His oral presentation before the Subcommittee and response to questions are his own, and do not necessarily represent the views of the Commission or any individual Commissioner.