Oil Companies to Pay Record Civil Penalty for Violating Antitrust Pre-Transaction Notification Requirements

The Justice Department's Antitrust Division, at the request of the Federal Trade Commission (FTC), filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia against crude-oil producers XCL Resources Holdings LLC (XCL), Verdun Oil Company II LLC (Verdun) and EP Energy LLC (EP).

The lawsuit alleges that the three companies violated the pre-transaction notification and waiting period requirements of the Hart-Scott-Rodino Act of 1976 (HSR Act), following Verdun's $1.4 billion purchase agreement for EP on July 26, 2021. At the time of transaction, Verdun was under common management with XCL.

According to the complaint, the three companies failed to observe a required waiting period following such a large transaction, in which federal agencies can investigate a potential merger before it closes. Instead, EP allowed Verdun and XCL to assume operational and decision-making control over significant aspects of its day-to-day business operations, including a stoppage to EP's planned well-drilling and development at a time when the U.S. crude-oil market faced significant supply shortages and consumers faced soaring gasoline prices.

Simultaneous to filing its complaint, the department filed a proposed settlement, subject to approval by the court, under which the defendants have agreed to pay a $5.6 million civil penalty to resolve the lawsuit, a record civil penalty for illegal pre-merger coordination in violation of the HSR Act.

Further details about this matter are described in the FTC's press release issued today, and in the complaint and competitive impact statement.

Consistent with the requirements of the Tunney Act, the proposed settlement, along with the competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period via email to [email protected] or by post to Maribeth Petrizzi, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue, NW, CC-8416, Washington, D.C. 20580. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.