![handle is hein.tera/crser0059 and id is 1 raw text is: Order Code RS22262
Updated May 28, 2008
CRS Repo for Congress
Price Gouging, the Antitrust Laws, and
Vertical Integration in the Petroleum Industry:
How They Are Related
Janice E. Rubin
Legislative Attorney
American Law Division
Summary
The antitrust laws and statutes to prohibit price gouging each aim to serve the
same end- realization of lower or reasonable prices for consumers, but they do so from
different perspectives. Antitrust law operates on the premise that vigorous and
unfettered marketplace competition will yield the most advantageous result for
consumers. Statutes concerning price gouging, by contrast, are direct consumer-
protection measures, generally making no reference to competition. Statutes to limit the
extent of vertical integration in the petroleum industry (common ownership of different
stages of production, marketing, or retailing) have been proposed at the federal level,
and exist at the state level, but contrary to the expectations of proponents, the price of
gasoline in those states that prohibit refiners from operating retail gasoline stations is
generally higher than in states without similar prohibitions. Although the potential for
anticompetitive actions by vertically integrated entities has been noted by, among others,
the Federal Trade Commission (FTC), it also states in a 2005 report, that the vast
majority of the FTC's investigations [into the petroleum industry] have revealed market
factors to be the primary drivers of both price increases and price spikes. The Energy
Policy Act of 2005 required an FTC investigation to determine if the price of gasoline
is being artificially manipulated by reducing refinery capacity or by any other form of
market manipulation or price-gouging practices; the I 10 Congress enacted the Energy
Independence and Security Act of 2007 with a provision authorizing the FTC to
promulgate a rule concerning market manipulation. Also in the 110th Congress, the
House has passed H.R. 1252, which would define price gouging as excessively
unconscionable or unreasonably increased prices during Presidentially declared
energy emergencies, incorporates the FTC Act, directs FTC enforcement, and
provides for civil and criminal penalties (several, similar measures are pending in the
Senate Commerce Committee); and H.R. 6074 to make oil-producing and exporting
cartels illegal under U.S. antitrust laws. This report, which may be updated to further
reflect congressional action, attempts to provide the antitrust context for the prohibited
practices, notes prior congressional action concerning vertical divestiture in the
petroleum industry, and provides information on the state divorcement statutes.
Congressional Research Service The Library of Congress
Prepared for Members and Committees of Congress](ViewImageLocal?handle=hein.tera/crser0059&div=1&collection=&method=preview&ext=.png&size=3)
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