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US House Passes Bill To Make OPEC, OPEC+ Illegal

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The US House of Representatives’ Judiciary Committee has approved a fresh bill by voice vote to amend the Sherman Anti-trust Act to make oil producing and exporting cartels illegal.

H.R. 948, which committee member Steve Chabot (R-Ohio) introduced on Feb. 4, reportedly gained traction following reports that the Organization of Petroleum Exporting Countries was considering formalizing its relationship with Russia and other non-OPEC producers referred to as OPEC+, and might discuss the matter when it meets with those countries’ representatives in Vienna on Apr. 18.

“OPEC is an international cartel whose members deliberately collude to limit crude oil production as a means of fixing prices, unfairly driving up the price of crude oil to satisfy the greed of oil producers,” Rep. Jerrold Nadler (D-NY) said in his opening statement at the bill’s markup.

“Such behaviour, if done by private companies, would be illegal per se under US anti-trust law. Because of a series of court decisions, however, our nation’s anti-trust enforcers are unable to protect American consumers and businesses from the direct harm caused by OPEC’s blatantly anti-competitive conduct,” Nadler said.

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Chabot’s bill addresses these decisions by expressly authorizing the US Department of Justice to pursue anti-trust enforcement actions against OPEC members, should it choose to do so, and by ensuring that American courts have jurisdiction to hear such cases, Nadler said.

“The bill also creates an exemption under the Foreign Sovereign Immunities Act to allow litigation against foreign countries to the extent that they are engaged in price-fixing and other anti-competitive activities in violation of this new section,” Nadler said.

Finally, the measure would clarify that the “act of state” doctrine, which generally disfavors judicial review of certain actions by foreign governments, does not prevent courts from deciding anti-trust cases brought against foreign governments under H.R. 948, Nadler said.

“NOPEC strikes an appropriate balance between allowing aggressive enforcement of US anti-trust law against OPEC to keep oil prices in check and respecting the separation of powers, by deferring to the executive branch to determine whether litigation is appropriate, given any foreign policy or national security concerns, Nadler said.

Similar bills have been introduced in previous sessions of Congress. Nadler said he voted for one in 2007, and the House passed the bill “with overwhelming bipartisan support.”

Michael Cohen, an analyst at Barclays in New York, said that even if H.R. 948 does not become law, it would give the Trump administration substantial leverage if global crude prices start to rise.

“Overall, we believe that if such legislation moved forward, it would threaten the sustainability of the OPEC and OPEC+ grouping, add more volatility to the market, and make the perceived floor under prices even more fragile. However, while oil prices are low, the likely appetite to move this legislation forward remains low,” Nadler said.

 

Source: OGJ

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