Tuesday, September 16, 2008
Posted by D. Daniel Sokol
Diana L. Moss of the American Antitrust Institute writes on The Petroleum Industry, Merger Enforcement, and the Federal Trade Commission.
ABSTRACT: This article attempts to provide a context for understanding the complex industry landscape against which joint ventures and mergers are evaluated and almost always approved by the FTC. It argues that fundamental changes in the domestic petroleum sector over the last 20 years should factor importantly into antitrust decisionmaking. It is not clear that the FTC's predictable approach has considered many of these changes and subtleties, so the article suggests ways in which that objective can be accomplished. The following section pieces together a picture of the domestic refining-marketing industry that should ideally inform all analysis of refining and marketing mergers. That picture is characterized by: (1) rapid, large-scale consolidation, (2) changes in refining technology and scale and contraction of wholesale marketing capacity, and (3) empirical economic analysis that identifies market power as a central concern. The next section offers thoughts on what is potentially missing from the analysis of refining and marketing mergers and the final section concludes.