Major Oil Firms Hit with Unprecedented Civil Fines for Antitrust Violations in Deal Notifications

The Antitrust Division of the Justice Department, at the behest of the Federal Trade Commission (FTC), initiated 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 contends that the three firms breached the pre-transaction notification and waiting period stipulations set forth in the Hart-Scott-Rodino Act of 1976 (HSR Act), in light of Verdun’s $1.4 billion purchase agreement for EP on July 26, 2021. At the time of the transaction, Verdun was being managed jointly with XCL.

As per the complaint, the three entities neglected to adhere to a mandatory waiting period following such a considerable transaction, during which federal agencies are permitted to scrutinize a potential merger prior to its completion. Instead, EP permitted Verdun and XCL to take over operational and decision-making authority concerning significant elements of its daily business activities, including a halt to EP’s intended well-drilling and development amidst a considerable supply deficit in the U.S. crude oil market and soaring gasoline prices for consumers.

Simultaneously with filing the complaint, the department submitted a proposed settlement, pending court approval, wherein the defendants have consented to pay a civil penalty of $5.6 million to settle the lawsuit, marking a historic civil penalty for unlawful pre-merger collaboration in contravention of the HSR Act.

Further information regarding this case is detailed in the FTC’s press release  published today, as well as in the complaint and the competitive impact statement.

In accordance with the requirements of the Tunney Act, the proposed settlement, along with the competitive impact statement, will be made available in the Federal Register. Any individual may submit written feedback regarding the proposed settlement during a 60-day comment period via email to bccompliance@ftc.gov or by mail to Maribeth Petrizzi, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue, NW, CC-8416, Washington, D.C. 20580. At the end of the 60-day comment period, the U.S. District Court for the District of Columbia may sanction the proposed settlement provided it is determined to be in the public interest.