WASHINGTON, D.C. — The Federal Trade Commission (FTC) has recently taken steps to address antitrust concerns stemming from Chevron Corporation’s proposed acquisition of Hess Corporation. The FTC has approved a consent order that specifically bars Hess CEO John B. Hess from being appointed to Chevron’s Board of Directors, a decision aimed at safeguarding competition within the oil market.
The FTC’s complaint alleges that John B. Hess engaged in communications with OPEC officials, including current and former Secretaries General, as well as a Saudi Arabian official. These discussions reportedly centered on maintaining oil market stability and managing inventories, with Mr. Hess purportedly encouraging these officials to take specific actions and publicly address these matters. The complaint further suggests that Mr. Hess advocated for stabilizing production and reducing inventories, actions often linked to increased oil prices and, consequently, elevated costs for products such as gasoline, diesel, and heating oil.
Henry Liu, Director of the FTC’s Bureau of Competition, stated, “Mr. Hess’s communications with competitors about global oil output and other dimensions of crude oil market competition disqualify him from serving on Chevron’s Board of Directors.” Liu emphasized the FTC’s commitment to leveraging all available tools to protect competitive markets, ultimately benefiting American consumers through lower fuel prices.
The merger agreement between Chevron and Hess necessitates Chevron to appoint Mr. Hess to its Board. However, the FTC contends that such an appointment would provide Mr. Hess with a broader platform to influence Chevron’s alignment with OPEC’s production strategies, potentially leading to higher oil prices. The complaint highlights the enhanced risk of industry coordination and compromised competition should Mr. Hess join Chevron’s Board.
To mitigate these risks, the FTC’s proposed consent order explicitly prohibits Chevron from nominating or appointing Mr. Hess to its Board. Additionally, Mr. Hess is barred from serving in any advisory or consulting capacity with Chevron, except for specified interactions with Guyanese government officials regarding Hess’s operations in Guyana, and involvement with the Salk Institute’s Harnessing Plants Initiative.
This action by the FTC underscores the agency’s proactive stance in preventing potential market distortions and ensuring competitive practices in the oil industry. The proposed consent order serves as a pivotal measure to maintain market integrity and protect consumer interests in the face of large-scale corporate transactions.
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