90 FR 73 pgs. 16130-16134 - Petition of Chevron Corporation and Hess Corporation To Reopen and Set Aside Order
Type: NOTICEVolume: 90Number: 73Pages: 16130 - 16134
Pages: 16130, 16131, 16132, 16133, 16134Docket number: [Docket No. C-4814]
FR document: [FR Doc. 2025-06564 Filed 4-16-25; 8:45 am]
Agency: Federal Trade Commission
Official PDF Version: PDF Version
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FEDERAL TRADE COMMISSION
[Docket No. C-4814]
Petition of Chevron Corporation and Hess Corporation To Reopen and Set Aside Order
AGENCY:
Federal Trade Commission.
ACTION:
Announcement of petition; request for comment.
SUMMARY:
Chevron Corporation and Hess Corporation (collectively, the "Respondents"), have asked the Federal Trade Commission ("FTC" or "Commission") to reopen and set aside the Commission's Decision and Order entered on January 17, 2025, concerning Chevron's acquisition of Hess. Publication of Respondents' petition is not intended to affect its legal status or its final disposition.
DATES:
Comments must be received on or before May 12, 2025.
ADDRESSES:
Interested parties may file comments online or on paper, by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Please write: "Chevron/Hess Petition to Reopen; Docket No. C-4814" on your comment and file your comment online at https://www.regulations.gov/docket/FTC-2025-0029/document by following the instructions on the web-based form. If you prefer to file your comment on paper, please mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144 (Annex O), Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Peter Richman (202-326-2563), Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
[top] Pursuant to section 6(g) of the Federal Trade Commission Act, 15 U.S.C. 46(g), and FTC Rule 2.51, 16 CFR 2.51, notice is hereby given that the above-captioned petition has been filed with the Secretary of the Commission and is being placed on the public record for a period of 30 days. After the period for public comments has expired and no later than 120 days after the date of the filing of the request, the Commission shall determine whether to reopen the proceeding and modify the Order as requested. In making its determination, the Commission will consider, among other information, all timely and responsive comments submitted in connection with this notification.
The text of the petition is provided below. An electronic copy of the filed petition and any public exhibits attached to it can be obtained from the FTC website at this URL: https://www.ftc.gov/legal-library/browse/cases-proceedings/241-0008-chevronhess-matter.
You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before May 12, 2025. Write "Chevron/Hess Petition to Reopen; Docket No. C-4814" on your comment. Your comment-including your name and your State-will be placed on the public record of this proceeding, including, to the extent practicable, on the www.regulations.gov website.
Because of the agency's heightened security screening, postal mail addressed to the Commission will be subject to delay. We strongly encourage you to submit your comments online through the www.regulations.gov website. If you prefer to file your comment on paper, write "Chevron/Hess Petition to Reopen; Docket No. C-4814" on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144 (Annex O), Washington, DC 20580. If possible, submit your paper comment to the Commission by overnight service.
Because your comment will be placed on the publicly accessible website at www.regulations.gov, you are solely responsible for making sure that your comment does not include any sensitive or confidential information. In particular, your comment should not include any sensitive personal information, such as your or anyone else's Social Security number; date of birth; driver's license number or other State identification number, or foreign country equivalent; passport number; financial account number; or credit or debit card number. You are also solely responsible for making sure your comment does not include any sensitive health information, such as medical records or other individually identifiable health information. In addition, your comment should not include any "trade secret or any commercial or financial information which . . . is privileged or confidential"-as provided by section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)-including in particular competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled "Confidential," and must comply with FTC Rule 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c). Your comment will be kept confidential only if the General Counsel grants your request in accordance with the law and the public interest. Once your comment has been posted on www.regulations.gov -as legally required by FTC Rule 4.9(b)-we cannot redact or remove your comment from that website, unless you submit a confidentiality request that meets the requirements for such treatment under FTC Rule 4.9(c), and the General Counsel grants that request.
Visit the FTC website at https://www.ftc.gov to read this document and the news release describing this matter. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding, as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before May 12, 2025. For information on the Commission's privacy policy, including routine uses permitted by the Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.
Authority: 15 U.S.C. 46, 5 U.S.C. 552.
April J. Tabor,
Secretary.
Text of Petition by Chevron Corporation and Hess Corporation To Reopen and Set Aside the Order
Pursuant to section 5(b) of the Federal Trade Commission Act, 15 U.S.C. 45(b), and section 2.51 of the Federal Trade Commission Rules of Practice, 16 CFR 2.51, Respondents Chevron Corporation ("Chevron") and Hess Corporation ("Hess") (collectively, the "Respondents") respectfully request that the Commission reopen and set aside the Commission's Decision and Order entered on January 17, 2025, 1 in Docket No. C-4814 (the "Order").
Footnotes:
1 ?The Order was issued on January 16, 2025, and final when received by the Respondents on January 17, 2025. See 16 CFR 2.34(c).
The Order bars Chevron from nominating, designating or appointing Hess CEO John B. Hess from joining Chevron's Board of Directors, as is required by the Respondents' merger agreement. 2 A divided Commission voted to issue a Complaint alleging that Mr. Hess's appointment to the Chevron Board "would heighten the risk of harm to competition, including meaningfully increasing the risk of industry coordination" in the global market for the development, production, and sale of crude oil. 3 As set forth below, and as made clear in Chairman Ferguson's and Commissioner Holyoak's September 30, 2024 dissenting statements, the Commission's Complaint failed to state a cognizable theory of competitive harm under section 7 of the Clayton Act, as amended, 15 U.S.C. 18, or section 5 of the Federal Trade Commission Act, 15 U.S.C. 45, under which to challenge the Chevron/Hess merger. 4 The Respondents hereby respectfully petition the Commission to reopen and set aside the Order in the public interest.
Footnotes:
2 ? See Decision and Order, In the Matter of Chevron Corp. & Hess Corp., File No. 241-0008 (Jan. 16, 2025), ¶?II.A. The Order also prohibits Chevron from appointing Mr. Hess to serve in an advisory or consultative capacity to Chevron or its board, with limited exceptions. Id. at ¶?II.B.
3 ? See Complaint, In the Matter of Chevron Corp. & Hess Corp., File No. 241-0008 (Jan. 16, 2025), ¶¶?19-20, 50.
4 ? See generally Dissenting Statement of Commissioner Andrew N. Ferguson, In the Matter of Chevron Corp. & Hess Corp., File No. 241-0008 (Sep. 30, 2024) (the "Ferguson Dissent"); Dissenting Statement of Commissioner Melissa Holyoak, In the Matter of Chevron Corp. & Hess Corp., File No. 241-0008 (Sep. 30, 2024) (the "Holyoak Dissent"). While Commissioners Holyoak and Ferguson did not issue separate written dissents to the Commission's January 17, 2025 final Decision and Order, their dissents are incorporated into the final order, and they are referenced in Commissioner Holyoak's written dissent to the Commission's contemporaneous final Decision and Order for the ExxonMobil matter. See Dissenting Statement of Commissioner Melissa Holyoak Joined by Commissioner Andrew N. Ferguson, In the Matter of ExxonMobil/Pioneer Res., Final Decision and Order, File No. 241-0004 (Jan. 17, 2025), at 1 n.3 ("I also voted today to reject the finalization of the Decision and Order that resolves the merger of Chevron and Hess. . . . My views have not changed with respect to the flawed nature of the complaint and consent in Chevron/Hess-views that continue to apply to my decision to vote against today's finalization of the Decision and Order [in the matter of ExxonMobil].").
I. Background
A. Merger Transaction
[top] On October 22, 2023, the Respondents entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which Chevron will acquire Hess. As consideration for the merger, Hess shareholders will receive shares of Chevron voting securities with an aggregate value of approximately $53 billion at signing. Among other things, Section 1.3(a) of the Merger Agreement requires Chevron and its Board of Directors, upon closing of the proposed
The Respondents have not yet closed the merger. On May 28, 2024, holders of a majority of Hess's outstanding common stock voted to approve the merger. Hess Guyana Exploration Limited ("HGEL"), a wholly owned subsidiary of Hess, is currently in arbitration relating to the applicability of a right of first refusal (the "Stabroek ROFR") contained in the operating agreement among HGEL and affiliates of Exxon Mobil Corporation and China National Offshore Oil Corporation to the merger. An arbitration merits hearing about the applicability of the Stabroek ROFR to the merger has been scheduled for May 2025, with a decision expected in the following three months.
B. The Order
On January 17, 2025, on the last Federal working day before the change of administrations, the Commission finalized the Order following a 3-to-2 vote. The Order bars Chevron from nominating, designating, or appointing Mr. Hess to the Chevron Board, or allowing Mr. Hess to serve in an advisory or consulting capacity to, or as a representative of, Chevron or the Chevron Board, other than with respect to interactions and discussions with (a) Guyanese government officials about Hess's oil-related and health ministry-related activities in Guyana, and (b) the Salk Institute's Harnessing Plants Initiative.
By its terms, the Order will terminate in ten years. Unless set aside, the Order will preclude Chevron from fulfilling its contractual obligation to appoint Mr. Hess to the Chevron board upon closing of the merger, and deprive shareholders of the benefit of his service.
The Respondents acknowledge that a majority of the prior Commission voted to issue the Order pursuant to an Agreement Containing Consent Order among Chevron, Hess, and the Commission staff (the "ACCO"). The Respondents did not sign the ACCO because they agreed with the prior Commission's characterization of the facts, or with its interpretation and application of section 7 or section 5 to those facts. As explicitly noted in the document, the ACCO was "for settlement purposes only and does not constitute an admission . . . that the law has been violated as alleged in the Draft Complaint, or that the facts as alleged in the Draft Complaint, other than jurisdictional facts, are true."? 5 Chevron and Hess entered into the ACCO solely to satisfy a key closing condition to their Merger Agreement, and thereby to reduce uncertainty and facilitate a more prompt closing of the proposed transaction, in the best interest of each company's shareholders. As noted in the Ferguson Dissent, in getting the Respondents to agree to the ACCO, "[t]he Commission leveraged its Hart-Scott-Rodino Act authority by threatening to hold up Chevron and Hess's $53 billion merger even though the lack of a plausible section 7 theory had long been obvious."? 6 That the Respondents acceded to this leverage should not factor into the Commission's decision whether to reopen and set aside this Order.
Footnotes:
5 ?Agreement Containing Consent Order, In the Matter of Chevron Corp. & Hess Corp., File No. 241-0008 (Sept. 23, 2024), at ¶?5.
6 ?Ferguson Dissent at 5-6 (citation omitted).
C. The Respondents' Compliance With the Order
Chevron has been in compliance with the Proposed Decision and Order contained in the ACCO since it was executed on September 23, 2024, and with the Order since it was finalized on January 17, 2025, as reflected in the required compliance reports filed by Chevron on October 23, 2024; November 22, 2024; December 20, 2024; and March 17, 2025.
II. The Commission Should Reopen and Set Aside the Order in the Public Interest
Respondents subject to a Commission decision containing an order which has become effective may file a request that the Commission reopen the proceeding to consider whether the order should be altered, modified, or set aside in whole or in part, if the public interest requires it. 7
Footnotes:
7 ? See 16 CFR 2.51.
Here, public interest in the effective enforcement of the antitrust laws, as well as in the continued investment in oil and gas production championed by Mr. Hess, is best served by setting aside the Order and allowing Mr. Hess to join Chevron's Board.
A. Setting Aside the Order Serves the Public Interest in the Effective Enforcement of the Antitrust Laws, as the Complaint Failed To State a Cognizable Theory of Harm Under Section 7 or Section 5
Section 7 prohibits acquisitions the effect of which "may be substantially to lessen competition, or to tend to create a monopoly,"? 8 and section 5 declares unlawful "unfair methods of competition in or affecting commerce."? 9 As noted in the Holyoak Dissent, the Complaint "does not take issue with Chevron's acquisition of Hess Corporation's assets. Nor could it."? 10 The Respondents' combined share in the global market for oil and gas is in the low single digits, and Hess's incremental portion of that share-what Hess will add to Chevron post-close-is de minimis. Even under the agencies' 2023 Merger Guidelines, the Respondents' combined share is far below the level at which a merger could be presumed to harm competition. The fact that the prior Commission, after its months-long investigation into the Respondents' operations, allowed the merger to proceed without any structural or behavioral remedies demonstrates that there are no anticompetitive grounds on which to challenge the combination of these two companies. That fact was amplified by Senator Mike Lee and Congressman Jim Jordan in their November 18, 2024 joint letter to former Chair Khan: "These mergers did not present any anticompetitive concerns, thus the FTC's consent decrees are unwarranted and did nothing to enforce the Clayton Act or protect consumers from anticompetitive harm."? 11
Footnotes:
8 ?15 U.S.C. 18.
9 ?15 U.S.C. 45(a)(1).
10 ?Holyoak Dissent at 2.
11 ?Letter from Sen. Mike Lee and Congressman Jim Jordan to Chair Lina Khan (Nov. 18, 2024), at 2, https://judiciary.house.gov/sites/evo-subsites/republicans-judiciary.house.gov/files/evo-media-document/2024-11-18%20JDJ%20Lee%20to%20Khan%20re%20Exxon%20Pioneer%20Chevron%20Hess%20briefing.pdf.
[top] Rather, the prior Commission relied on a novel theory on which to extract a concession from the parties, focused not on the two companies' asset footprints and oil and gas production, but rather on the appointment of Mr. Hess to Chevron's Board of Directors.
This allegation fails to state a cognizable antitrust theory of harm. As highlighted in the Holyoak Dissent,
Nothing in the complaint alleges that Mr. Hess has ever attempted to, or coordinated with, a rival.
Taking the allegations and the implications against Mr. Hess as true, neither he nor Hess Corporation ever coordinated or attempted to coordinate with Hess Corporation's rivals. 12
Footnotes:
12 ?Holyoak Dissent at 2, 4.
Given that fact, there is no basis under the 2023 Merger Guidelines to conclude the proposed merger would violate section 7 or section 5 under a coordinated effects theory of competitive harm. But as also noted in the Holyoak Dissent, "the tangible and intangible assets of Hess Corporation have nothing to do with the violation of law [alleged in the prior Commission's complaint]-it's all about the acquisition of Mr. Hess." This theory of harm, Commissioner Holyoak notes, is "farcical" and one that "[c]ertainly no court would endorse."? 13
Footnotes:
13 ? Id. at 2.
Even were the Respondents to accept that this is a plausible theory of harm under section 7, it fails on its own terms. As highlighted in the Ferguson Dissent, this theory assumes that: (i) Chevron would allow Mr. Hess to continue such communications post-closing of the transaction; (ii) that such communication is made worse by the transaction-a transaction through which Mr. Hess's role would be reduced from CEO and significant shareholder (as he currently is in Hess Corporation) to non-executive member of a thirteen-person Board (as he would be at Chevron post-merger); and (iii) that this conduct would have a significant effect on global oil prices, which, as stated above, is implausible given the Respondents' low combined shares and lack of any coordinated behavior or sharing of competitively sensitive information. The Complaint provides no justification for any of these three assumptions.
While the former Chair touted the withdrawal of Mr. Hess's nomination to the Chevron Board in exchange for clearance of the Respondents' merger in a list of Commission Accomplishments achieved under her tenure, 14 the Ferguson Dissent rightly notes that this settlement "does not vindicate the rule of law," but rather serves to further reduce antitrust enforcement to a "pay-for-peace racket inflict[ing] serious injury on the rule of law-and on the Commission's credibility."? 15 Preserving the Commission's credibility is paramount to the public interest in the effective enforcement of the antitrust laws, and this interest is best served by setting aside the Order in recognition of the Complaint's deficiencies.
Footnotes:
14 ?Federal Trade Commission Accomplishments, June 2021-January 2025 (Jan. 19, 2025), at 16, https://www.ftc.gov/system/files/ftc_gov/pdf/ftc-accomplishments-june-2021-january-2025.pdf (claiming the Order and the ExxonMobil/Pioneer settlement "[a]dvanced the increased risk of coordination as a basis for Section 7 liability").
15 ?Ferguson Dissent at 6, 7.
B. The Public Interest in Continued Investment in Oil and Gas Supply Is Served by Setting Aside the Order
In addition to the public's interest in the just enforcement of the antitrust laws, there is a significant public interest in continued investment in oil and gas supply. Ensuring that U.S. oil and gas producers can meet expected increases in consumer demand for energy is vital to the interest of consumers, downstream industries that rely on oil and gas production, as well as U.S. national and energy security. 16
Footnotes:
16 ? See Exec. Order No. 14156, 90 FR 8433, 8433 (Jan. 29, 2025), https://www.federalregister.gov/documents/2025/01/29/2025-02003/declaring-a-national-energy-emergency ("The integrity and expansion of our Nation's energy infrastructure-from coast to coast-is an immediate and pressing priority for the protection of the United States' national and economic security.").
Mr. Hess has spent his career advocating for such an increase in investment to grow oil and gas supply, for the benefit of consumers, workers, and U.S. energy security. Throughout his career, Mr. Hess has been recognized as an industry authority on energy policy. He has been called on to advise U.S. administrations on their energy policy, including as an informal advisor to members of the cabinets of Presidents Clinton, Bush, Obama, Biden, and Trump.
As CEO of Hess, Mr. Hess has put this advocacy for greater investment into practice. Under Mr. Hess's leadership, Hess has differentiated itself from its peers with the highest levels of cash flow reinvestment in the industry in order to increase future oil and gas supply. This prioritization of reinvestment for long-term production growth is manifest in Hess's global production of oil and gas, which grew from 101 million barrels of oil equivalent in 2018 to 144 million barrels in 2023, an increase of nearly 45 percent. 17 This reinvestment strategy is projected to yield further robust growth in the near-term: a recent Bloomberg analyst consensus projects Hess will achieve a 14 percent compound annual growth rate ("CAGR") over the years 2023 to 2025, compared to the median cohort CAGR of two percent. 18 This projected organic growth rate is approximately double that of Hess's closest peer, and is multiples of that of U.S. major oil and gas producers. Hess, under Mr. Hess's leadership, has chosen to invest its capital in future oil and gas production for the long term, rather than return capital to shareholders.
Footnotes:
17 ?Hess Corp., 2020 Annual Report (Mar. 2021), at 7, https://investors.hess.com/static-files/0869f80e-06ec-419d-b18a-b51d34968c44; Hess Corp., 2023 Annual Report (Feb. 2024), at 12, https://investors.hess.com/static-files/64c3f1e7-08e2-40b1-9190-ca2492e17343.
18 ?These data are based on FactSet, Enverus, and Bloomberg consensus estimates as of July 8, 2024. The 2023-2025 production growth estimates are pro forma for announced mergers, acquisitions, and divestitures per public company disclosures.
This record shows Mr. Hess's longstanding commitment in investing to grow long-term oil and gas supply; it is this same commitment that first led Chevron to propose his appointment to the Chevron Board under the Merger Agreement, and that would make Mr. Hess an asset to the Chevron Board. At this vital moment when the administration looks to expand oil and gas production, it is in the public interest that Mr. Hess be allowed to continue this work.
III. Conclusion
The Respondents agree with Chairman Ferguson that "[n]othing in [s]ection 7 requires Mr. Hess to stay off the Chevron board."? 19 Consistent with the discussion above, the Respondents respectfully request that the Commission reopen and set aside the Order. Setting aside the Order is consistent with the public interest in the Commission's appropriate and effective enforcement of the antitrust laws, and will promote long-term capital investments to grow American oil and gas supplies.
Footnotes:
19 ?Ferguson Dissent at 6-7.
Dated: March 27, 2025.
Respectfully submitted,
Nelson O. Fitts,
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David A. Higbee,
A&O Shearman, 1101 New York Avenue NW, Washington, DC 20005, Attorney for Respondent Chevron Corporation.
[FR Doc. 2025-06564 Filed 4-16-25; 8:45 am]
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