Senate Judiciary Committee Chairman Arlen Specter (R-PA) and five other members of the panel introduced legislation Thursday that seeks to tame natural gas and crude oil prices by strengthening antitrust enforcement and bolstering competition in the energy industry.

The bill would expose energy companies to prosecution under the Clayton Act if they withhold oil, natural gas or product supplies to drive up prices or create shortages in the market. The Clayton Act prohibits price discrimination, tying agreements and mergers and acquisitions that could impede competition.

In an effort to restrict consolidation in the energy industry, the measure also calls for the attorney general and chairman of the Federal Trade Commission (FTC) to study whether Section 7 of The Clayton Act should be toughened with respect to persons in all aspects of the oil, natural gas and product industries. Section 7 of The Clayton Act currently prohibits mergers and acquisitions where the effect “may be to lessen competition, or to tend to create a monopoly.”

The attorney general and FTC chairman will be required to submit to Congress the findings of their study, including recommendations for legislation, within 270 days of enactment of the bill.

The bill comes less than a month after the Senate Judiciary Committee held a hearing to explore the connection between the stepped-up consolidation in the oil and gas industry and the run-up in energy prices (see Daily GPI, March 15). At the time, Specter began circulating a “discussion draft” of proposed legislation that would set the bar higher for oil and gas mergers, and would make it illegal to withhold energy supplies to drive up prices. The CEOs of leading oil and gas companies, appearing before the committee, expressed their opposition to the bill, saying that they believed existing antitrust laws were adequate.

“Over 2,600 mergers have occurred in the U.S. petroleum industry since the 1990s, including transactions involving the largest oil and gas companies in the nation,” Specter said Thursday. “With the high fuel prices the American consumer is enduring, it is time for an examination of what oil and gas industry consolidations have done to prices.”

In addition to Specter, the bill is sponsored by Sen. Herb Kohl (D-WI). Co-sponsors include Sens. Mike DeWine (R-OH), Richard Durbin (D-IL), Dianne Feinstein (D-CA) and Patrick Leahy of Vermont, the ranking Democrat on the Senate judiciary panel.

The legislation also requires the Comptroller General of the United States to evaluate the effectiveness of divestitures required under “covered consent decrees,” to which either the FTC or Department of Justice was a party, that was entered by a district court not earlier than 10 years before the date of enactment of this bill, and involved persons in the oil, product or natural gas industries.

The Comptroller General will submit a report to Congress, the FTC and Justice within 180 days, at which time the attorney general and FTC chairman “shall consider whether any additional action is required to restore competition or prevent a substantial lessening of competition occurring as a result of any transaction.”

The bill, the “Oil and Gas Industry Antitrust Act of 2006,” further calls for the attorney general and FTC chairman to establish a joint federal-state task force to investigate information sharing (including through the use of exchange agreements and commercial information services) among persons in the oil, product and natural gas industries.

©Copyright 2006Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.