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Newsletter | Revolving Door Project Newsletter | May 15, 2024

Pioneer’s Price Fixing Scandal Is Yet Another Reason We Need To Fully Fund Antitrust Enforcers

Anti-MonopolyClimateCorporate CrackdownGovernanceGovernment Capacity

Plus, the Villains of Food: a book review from our executive director.

This newsletter was originally published on our Substack. Read and subscribe here.

Major corporate scandals make the consequences of Republican-led budget cuts at antitrust enforcement agencies even clearer. Crucially, they serve as reminders that the federal government’s ability to combat the ill effects of monopolization rises and falls in direct proportion to funding, even when motivated and creative leadership are at the helm.

The Federal Trade Commission (FTC) dropped a bombshell report two weeks ago revealing Scott Sheffield, the former CEO of fracking company Pioneer Natural Resources, had colluded with domestic and foreign oil producers to restrict global supply. The result? Higher gasoline prices and bigger profits for fossil fuel executives. Despite those results, the agency approved Exxon’s acquisition of Pioneer on the condition that Sheffield be prohibited from serving on Exxon’s board of directors or advising the oil major following the deal. The consent order outlining this agreement cites an FTC complaint alleging that “Sheffield has campaigned to organize anticompetitive coordinated output reductions between and among U.S. crude oil producers, and others, including [OPEC] and a related cartel of other oil-producing countries known as OPEC+.”

As our Kenny Stancil found, Sheffield has personally spent more than $750,000 to shape energy policy in his favor at the federal and state levels. He worked to keep the Texas Railroad Commission, a little known but immensely powerful entity tasked with regulating oil, gas, utilities, and surface mining throughout all of Texas, under Republican control, spending more than $120,000 on the effort. And on the federal level, Sheffield lobbied former president Trump to get OPEC to “to pull back production and limit global supply” in 2020. Those efforts set the conditions for Pioneer’s banner year in 2021, when the company posted its highest profits in a decade. 

But Biden has thus far remained silent on the controversy, a move Kenny called “inexplicable and inexcusable.” Not only must the Biden administration vilify Sheffield for his direct role in greedflation, but they must expend even more resources to uncover how far the conspiracy goes (other executives, other American oil and gas majors?) and how badly the pocketbooks of Americans were harmed. But their best tool to do that, the Federal Trade Commission, sorely lacks the resources it needs. 

The FTC and its fellow antitrust enforcer, the Department of Justice Antitrust Division (ATR), are only able to hold corporations and executives accountable when they have the people power and funding to do so. And they have been warning for a long time that their resources are insufficient. 

Earlier this year, the Capitol Forum reported that after two dozen Democratic senators urged the FTC to rigorously examine oil and gas mergers (including the Exxon/Pioneer acquisition at the heart of this price-fixing controversy), FTC Chair Lina Khan explicitly called for more resources for such examinations:

“Merger reviews and litigation have strained the agency’s resources and capacity to investigate new merger filings which continue to require close scrutiny,” Khan wrote in a correspondence released by the FTC under the Freedom of Information Act.  “While Congress has charged the commission with a critical mission, our resources have failed to keep pace.” 

The Commission, she said, has been “forced to make difficult decisions” due to staffing levels. “Additional resources would better equip the Commission to fully pursue its mandate and continue the vital work of promoting competition in oil and gas markets.” 

Fast forward to May, when Commissioner Rebecca Kelly Slaughter noted in her statement on the Sheffield consent decree that “to ensure that enforcers can adequately and thoroughly investigate potentially unlawful mergers, lawmakers should amend the HSR Act to extend statutory deadlines.” This was yet another acknowledgment of the impact of a personnel deficit–the FTC cannot complete merger investigations within the current statutory time crunch without vastly increased staff resources. 

Commissioner Slaughter was careful to note that Sheffield’s consent decree doesn’t prevent the FTC from taking more action on the Exxon-Pioneer merger, including a more time-consuming conduct investigation into potential antitrust violations associated with the market manipulations uncovered in the FTC’s merger review. As predicted by Matt Stoller, consumers may also get the chance to confront Sheffield’s price fixing via class action lawsuits. Furthermore, the FTC is reportedly planning to refer Sheffield’s case to the Department of Justice, a move that could mean criminal charges. 

But more action necessitates more resources, and the antitrust enforcement agencies have been contending with a concerted effort to slash their funding. 

Earlier this year, congressional appropriations handed the DOJ’s Antitrust Division (which would pursue any criminal charges against Sheffield) a 20 percent budget cut. That’s exactly the kind of blow to resources that forces an agency to cut back on enforcement—giving monopolists more opportunity to harm competition and consumers. Revolving Door Project and Fight For the Future connected the dots on the ATR’s budget cut—and found that multiple members of the House and Senate Appropriations Committees, which oversaw the cut, either received campaign contributions from or are personally invested in Big Tech firms. Furthermore, we found over three dozen staffers working for the Appropriations committees or their members currently or formerly lobbied for Big Tech. Companies like Google and Meta are facing an antitrust enforcement reckoning and have a lot to gain from weaker agencies. As Senator Elizabeth Warren, who pushed against the budget cut, said: “The army of lobbyists and lawyers representing Wall Street and Big Tech is doing cartwheels about potential funding cuts for antitrust enforcement by the Justice Department.” 

While the FTC’s budget remained steady this fiscal year, they are clearly already hitting the limit of their enforcement capabilities under the funding status quo. Encouragingly, the Biden Administration has proposed a $63 million boost for the ATR in FY25, alongside an even larger increase for the FTC ($535 million proposed for FY25 compared to $425 million enacted in FY24). But as the ATR’s funding debacle shows, the White House must fully commit to protecting the antitrust enforcement agencies’ budgets if they have any hope of protecting Americans from corporate malfeasance. 

The Villains of Food

By: Jeff Hauser

Progressive wonks sometimes bemoan what they see as the right wing’s natural comms advantage: they can rely on the simplest arguments, the rawest emotions, to rally their base—truth optional! But however understandable this gripe might be, we at RDP disagree.

While technocratic policy formulation very much has a role to play, there are also immensely compelling stories to be told about the corporate villains responsible for so much pain across the country and around the world. And these stories can be told accurately without sacrificing the need to resonate emotionally.

That’s why Austin Frerick’s new book is such a valuable contribution to the discussion of ostensibly complex topics such as agriculture, environmental regulation, labor relations, and antitrust law. His book Barons: Money, Power, and the Corruption of America’s Food Industry not only sheds light on important topics, it does so through entertaining stories about horrendous villains.

Frerick is a progressive wonk currently serving as a Fellow of the Thurman Arnold Project at Yale University after stints at, among other places, the Open Markets Institute and the U.S. Department of Treasury. But he writes through a personal lens as a seventh generation Iowan who has witnessed firsthand how his state has become, all too frequently, a literal cesspool of hog…well, feces. The Iowa his family loved—a pastoral patchwork of family farms and family run small businesses—had become a victim of crushing standardization, as the institutions that maintained community were steamrolled by international goliaths adept at buying friendly political outcomes.

Who are these international Goliaths? Frerick names specific names—and not just the megafirms listed on stock tickers, but the individuals and families that have disproportionately benefited from Iowa’s deterioration. Did you know that everything from Krispy Kreme to Einstein Bagels to Panera Bread to Keurig (and dozens of other brands) have been knitted together into a single “coffee baron” business that sells more coffee than Starbucks and is owned by a family which had close ties to the Nazi regime in Germany? That “the slaughter barons” of JAB are a couple of Brazilian brothers who honed their skills at bribery in Brazilian politics, and have now taken their show on the world at the leading edge of concentration in the meatpacking business?

Or that these noxious slaughter barons came to their powerful position in the United States via the assent of the twice-disappointing Democratic Secretary of Agriculture Tom Vilsack?

That Vilsack was a bad pick for Agriculture Secretary—a point we made repeatedly back in 2020—is but one theme in which Frerick echoes RDP. Other conclusions of the book with which we emphatically agree include: That state and federal governments would protect our interests better if they were staffed adequately. That the revolving door between government and industry benefits barons over proles. That ostensibly independent economists quoted by the media are often on the corporate dole without disclosure. 

Frerick’s book powerfully exposes how unchecked corporate greed is reshaping the American way of life in one of its most essential domains: food. It’s also immensely entertaining to read. So whether you’re interested in knowing who to name and shame for BigAg’s evils, in learning how to tell people stories with policy relevance, or just looking for a juicy read, read the book!

Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week: 

The Pro-Fossil Fuel Lawmakers and Regulators Bankrolled by Scott Sheffield, Fracking CEO Behind Oil Price-Fixing Conspiracy

RELEASE: Biden Inexplicably Failing to Vilify GOP Mega-Donor Who Colluded With OPEC to Raise Gas Prices

Biden Can Run & Win on Big Oil GOP Donors Colluding to Raise Gas Prices

Misinformation Miscues

Four executive branch agencies that desperately need more funding and staffing

Taft snaps up Fudge

Coalition urges IRS to expand Direct File

Unclear Lines

Anti-MonopolyClimateCorporate CrackdownGovernanceGovernment Capacity

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