The Long Shadow of Standard Oil: Policy, Petroleum, and Politics at the Federal Trade Commission
- Author(s): Bilal Sayyed, Timothy Muris
- Date Posted: August 2012
- Law & Economics #: 12-52
- Availability: Full text (most recent) on SSRN
The Federal Trade Commission has investigated the structure and competitiveness of the petroleum industry many times over the past 100 years. Some of the Commission’s most intensive investigations were initiated in response to Congressional inquiries, most notably the enormously expensive and ultimately fruitless attempt to dismember the industry vertically in the 1970s. Since that case ended in 1981, the FTC has attempted to limit the influence of “political antitrust” on the petroleum industry despite intense political interest in the price of gasoline. Although the agency has conducted several substantial investigations of the industry without finding evidence of illegal conduct, and appears to apply strict standards in its review of petroleum industry mergers (suggesting the continued influence of political considerations), on balance, the FTC has succeeded in limiting the influence of politics on its antitrust enforcement decisions.
We seek both to acknowledge and to begin to explain the FTC’s recent success, drawing primarily from incidents over the last fifteen years. We focus on three areas of intense political interest in which the FTC has avoided implementing what we think are extreme and unnecessary suggestions from congressional and local enforcement officials: (1) merger enforcement; (2) scrutiny of certain business practices, such as zone pricing; and (3) retail prices. The FTC has largely succeeded in recent years in avoiding Congressional control over its petroleum industry agenda through five steps: (1) continuity across administrations in the standards used to challenge mergers and identify problematic conduct; (2) a commitment to transparency; (3) engaging its critics and a willingness to subject itself to self-criticism through the use of retrospective reviews of its enforcement decisions; (4) a robust research agenda conducted by the FTC’s Bureau of Economics; and (5) an affirmative, pro-competition program, illustrated by the FTC Office of Policy Planning’s comments on state proposals that would limit or restrict competition in the petroleum industry.