The Federal Trade Commission (“FTC”) has filed a Complaint and a proposed Consent Order that would bar the CEO of oil company Hess from sitting on the Board of Chevron after the merger of the two companies. According to the Complaint filed in the matter on September 29, CEO John B. Hess has a long history of encouraging high-level OPEC executives in their stated mission to stabilizing pricing in oil markets. The merger agreement between the parties requires them to appoint Mr. Hess a Director of Chevron, the surviving company.
OPEC oil producers account for approximately 50 percent of global crude oil production. Because Chevron is one of the 10 largest oil enterprises in the world and the fourth largest public, non-state-owned oil company, the Complaint alleges, Mr. Hess’s “participation on Chevron’s Board of Directors would amplify Mr. Hess’s supportive messaging to OPEC and others … increasing the likelihood of a lessening of competition in the relevant market [for the production and sale of oil].” Compl., ¶ 11. The Consent Order would prohibit Mr. Hess from serving on the Chevron Board or in an advisory capacity, with certain limited exceptions.
This matter is notable because the Complaint does not allege that the merger of Hess and Chevron would harm competition in any relevant market. Its focus is entirely on preventing a single person with an alleged demonstrated affinity for price stability from sitting on the Board of Directors of the combined company. In doing so, the FTC raises concerns similar to those behind the Department of Justice’s reinvigorated enforcement of Section 8 of the Clayton Act, which prohibits many director and officer interlocks between competitors; and the case stakes out the FTC’s position that a company is only as competitive as the people who run it.
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