Why Do They Do This?

The oil and gas business is highly competitive in the exploration for and acquisitions of reserves, the acquisition of oil and gas leases, equipment and personnel required to find and produce reserves, and in the gathering and marketing of oil, gas, and natural gas liquids. The competitors include national oil companies, major integrated oil and gas companies, other independent oil and gas companies, and participants in other industries supplying energy and fuel to industrial, commercial, and individual consumers.

From the liberal point of view, the FTC and the EC should recognize the Boeing-McDonnell Douglas merger as an international issue, not a national issue, so that it should restrain autonomy of state, in this case the U.S., preventing from intervention to protect domestic interests. However, in the case of Boeing-Mc Donnell Douglas, both antitrust authorities, specifically the European Commission, acted in a protectionist manner keeping domestic interests. In a study on 290 proposed acquisitions screened by the EC during 1990, it was found that although European merger and acquisition regulators claim to be protecting competition and consumers, in fact, the more harm suffered by European rival firms when the acquire is coming from the outside the EU, the greater the likelihood of European regulatory intervention against the proposed merger or acquisition . The EC’s focus on competitors rather than consumers was revealed by this study.

The divestiture of Conoco by DuPont also reflected changing conditions in the energy industry. As noted in a May 12, 1998, article in the New York Times: DuPont bought the oil company in 1981 as insurance against the pricing and supply tactics of the Organization of Petroleum Exporting Countries. But oil prices have been far less volatile than it feared, and DuPont continues to de-emphasize the petrochemical side of its

Competition in the oil industry is separated by about 10 cents here in the US. The difference between ARCCO, Shell, Mobil, and Chevron, is between 1 and 10 cents. Oil companies don’t compete with each other. With gas prices constantly fluctuating towards the $3 mark, there is little room to raise prices. Consumers will not pay 25 cents more for a gallon of gas. Although Chevron Texaco and ExxonMobil make have a slight difference in price at the pump, the will not try to do anything to rock the boat.

High oil price for last few years drove the energy industry to come up with a new technological innovation and the result is a new drilling technique like hydraulic fracturing. This new technology made drilling easy in North Dakota and Texas (Timiraos, 2014). With more oil drilled domestically, U.S became net energy exporter instead of an importer. Also falling demand due to energy conservation, more efficient cars, less demand in China and OPEC opted against cutting production levels made the price go down. When Global economic growth was slowing and most economists agree that both supply and demand played role in the last year oil price plunge. Driven by the increased supply, oil price dropped from $82 to $50 between Oct'14 and Jan'15. The IMF summarizes 58% of the drop in oil price to supply and only 42% to demand.

The Sherman Antitrust Act broke apart Standard oil into several pieces in 1911, and one of these pieces, named Standard Oil Co. of California, would later become Chevron. It was a part of the “Seven Sisters”, which dominated the oil industry on a global level in the early 20th century. Standard oil of California could only use the name when it was in California, and so it adopted the name Chevron. In 1933, Saudi Arabia Granted the company a concession to find oil, which led to the discovery of oil in Saudi Arabia, and the world’s largest oil field.

Another way by which Standard Oil was able to expand was when Rockefeller became worried about the overproduction of oil, which would lead to falling prices. Due to his worries, Rockefeller made up a plan with an alliance of refiners (people who owned the oil processing plants). By the end of 1872, Standard Oil had acquired 34 former rivals, taken control of Cleveland, made alliances with several key New York refiners, and secured even lower shipping rates . Due to such low shipping rates, Standard Oil began to produce other products such as lubricants, candles, paints, and dyes.

When independent companies tried to compete, Standard Oil quickly cut prices--sometimes below cost--to drive them out of business. Then Standard raised prices to recoup its losses.

The Federal Trade Commission has taken the first step toward blocking the proposed $6.3 billion merger of Staples and Office Depot, saying the deal would hurt competition in the market for office supplies sold to large corporations. They made the complaint that the merge violated antitrust laws. "The Commission has reason to believe that the proposed merger between Staples and Office Depot is likely to eliminate beneficial competition that large companies rely on to reduce the costs of office supplies," said FTC Chairwoman Edith Ramirez. The FTC has blocked the merge of these companies since 1997. The companies have released a joint statement saying that they think the FTC vision of the market is "based on a flawed analysis and misunderstanding

The merger case between General Electric Co. (GE) and Honeywell Inc. has sparked considerable debate between US antitrust agencies, economists and scholars since the announcement of its unsuccessful attempt by the European Commission (EC). GE is a corporation active in aircraft engines, financial services, and transportation systems while Honeywell is a manufacturing company producing aerospace products and is the leading supplier for engine starters. Both parties are from the US.

GE has officially announced the merge and acquisition with Honeywell on October 22, 2000 and if it has been gone through, GE will be the biggest company in aerospace industry with more than 60% of total market share. Undoubtedly, GE will be more monopolists and may bring about the unfair competition with the rivals. Hence, both the United States (represented by the Department of Justice (DOJ)) and European countries (represented by the European Commission (EC)) have a "Antitrust Law ' subject to protect the merger

Trefis Team, a Forbes contributor, reports that this consolidation will cost Halliburton $35 billion of stock and cash dividends and if the consolidation does not occur,

The General Electric (GE) and Honeywell International (HI) case illustrates the complexities of structuring mergers and acquisitions when the combined firms are capable of exerting market influence that threatens the competitive landscape. While General Electric's CEO, Jack Welch, characterized the deal as, "This is the cleanest deal you'll ever see," European anti-trust regulators were not so inclined to view the transaction as harmless to competition (Elliot, 2001).

As we can see on attached charts - Market was not too sure about this merger (“On paper, the deal has much to commend it, many outsiders say”. But thorny issues remain, including how to accommodate the strains between consultants and auditors, potential conflicts of interest involving important clients and even the delicate matter of choosing a new name. If the negotiators are not careful, fallout could haunt the combined firm for years to come.) From the time when merger plans were made public Shares of

A proxy statement is a statement required of a United States firm when soliciting shareholder votes. This statement is filed in advance of the annual meeting. The firm needs to file a proxy statement, otherwise known as a Form DEF 14A, with the U.S. Securities and Exchange Commission. This statement provides important information and is useful in assessing how management is paid and potential conflict-of-interest issues with auditors.