Antitrust Law Daily Proposal to allow government antitrust suits against OPEC back before House
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Friday, May 18, 2018

Proposal to allow government antitrust suits against OPEC back before House

By Jeffrey May, J.D.

Since 2000, Congress has considered legislation that would amend the Sherman Act to prohibit foreign governments or their instrumentalities from conspiring to limit production or maintain prices of petroleum products. The "No Oil Producing and Exporting Cartels Act" or "NOPEC Act" was first introduced that year by Senator Herb Kohl (R.-Wis.), with bipartisan support. The measure was reintroduced six more times. It came close to becoming law in 2007, following House passage. But it was unable to make it over the finish line.

Today, the House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law held a hearing on suits against OPEC as members of the subcommittee are contemplating reintroducing the legislation. This measure would not allow for a private right of action against OPEC countries for fixing oil prices. Instead, it would only allow for a government enforcement action.

Judiciary Committee Chairman Bob Goodlatte (R.-Va.) said that he looked forward to moving the bill forward. "The fact that the Organization of the Petroleum Exporting Countries (OPEC) is not being held accountable for its anticompetitive behavior makes a mockery of U.S. antitrust law," Goodlatte said in a prepared statement. "Despite strong support in Congress over a period of years, NOPEC has not yet become law. However, recently, President Trump signaled that he may be more receptive than prior presidents to NOPEC. This creates a real opportunity to enact this long overdue law," he added.

At the hearing, entitled "Accountability for OPEC: ‘The No Oil Producing and Exporting Cartels Act,’" House lawmakers heard testimony from four witnesses. Seth Bloom, president of Bloom Strategic Counsel PLLC and a former staffer for Kohl, as well as Ariel Cohen, PhD, Senior Fellow at the Atlantic Council, provided support for the measure.

Phillip Brown, a specialist in energy policy for the Congressional Research Service (CRS), said that CRS does not take a position on the proposal. Brown suggested that the existence of global oil supply manager, such as OPEC might prevent extreme price volatility, thereby providing a benefit. However, he added that "a robust oil futures market, along with the growth of price-responsive U.S. tight oil could provide a degree of price stability and moderation without the existence of a supply manager."

Mark N. Cooper, Senior Fellow at the Consumer Federation of America (CFA), also offered testimony. According to Cooper, even if the government had the right to sue the sovereign nations who are members of OPEC, it would not have the political will. "NOPEC is unlikely to be implemented in the short-term and likely to be ineffective in the long-term," Cooper said. The CFA supports a demand-side solution to the problem of America’s oil "addiction."

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