FTC order bans former Pioneer CEO from Exxon board seat in merger deal

Exxon Mobil’s $65 billion deal to buy Pioneer Natural Resources has received clearance from the Federal Trade Commission (FTC), but the former CEO of Pioneer was barred from joining the new company’s board of directors.

On May 2, 2024, the FTC took action to address antitrust concerns related to Exxon’s acquisition of the oil producer.

The $64.5 billion deal raised apprehensions about potential collusion in crude oil markets, prompting the FTC to approve a consent order preventing Pioneer’s founder and former CEO, Scott Sheffield, from obtaining a seat on Exxon’s board of directors or serving in an advisory capacity after the acquisition.

The proposed consent order aims to thwart Sheffield—a major GOP campaign contributor— from engaging in collusive activities that could drive up crude oil prices, leading to higher costs for American consumers and businesses purchasing gasoline, diesel fuel, heating oil, and jet fuel.

The FTC’s complaint alleges that Sheffield attempted to collude with representatives of the Organization of Petroleum Exporting Countries (OPEC) and the OPEC+ cartel, comprising other oil-producing nations, to reduce oil and gas output.

The FTC says Sheffield may have colluded with OPEC to coordinate production and raise oil prices to pad company profits at the expense of hardworking Americans. This coordinated effort could result in increased pump prices, benefiting Sheffield’s company at the expense of consumers.

In discussing his efforts to coordinate with Texas producers under a production cut mandated by the Railroad Commission of Texas, Sheffield said, “If Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi and Russia will follow. That was our plan,” he said, adding: “I was using the tactics of OPEC+ to get a bigger OPEC+ done.”

Kyle Mach, Deputy Director of the FTC’s Bureau of Competition, emphasized, “Mr. Sheffield’s past conduct makes it crystal clear that he should be nowhere near Exxon’s boardroom. American consumers shouldn’t pay unfair prices at the pump simply to pad a corporate executive’s pocketbook.”

The complaint details Sheffield’s efforts to align oil production across the Permian Basin in Texas and New Mexico with OPEC+, including extensive communication via text messages, in-person meetings, WhatsApp conversations, and public statements. His actions aimed to influence production cuts and market dynamics, potentially leading to inflated profits.

Furthermore, the FTC highlighted Sheffield’s existing board position at The Williams Companies, Inc., a company with operations overlapping Exxon’s, suggesting that his appointment to Exxon’s board would create an anticompetitive board interlock.

“It’s no surprise that Donald Trump keeps blaming President Biden for high gas prices, as his Big Oil and gas financial backers are price gouging consumers so that Americans pay more at the pump even after years of record profits,” said Climate Power senior advisor for oil and gas Alex Witt. “Trump just handpicked a former Exxon lobbyist to be of chair the RNC, he appointed Exxon’s CEO to be his Secretary of State, and Pioneer Natural Resources spent $100,000 to make Scott Pruitt Trump’s EPA administrator so that they would give Pioneer everything that they asked for.” 

Under the proposed consent order, Exxon is prohibited from nominating Sheffield to its board or engaging him in an advisory capacity. Additionally, Pioneer employees or directors, excluding specific individuals, are barred from Exxon’s board for five years, and Exxon must comply with certain reporting obligations under the Clayton Act Section 8 for ten years.

While Pioneer defended Sheffield’s actions, arguing they were misunderstood and did not aim to circumvent competition laws, the FTC’s decision underscores the importance of preventing anticompetitive practices in crucial markets like energy.

The consent order signals the FTC’s commitment to safeguarding fair competition and protecting consumer interests amidst significant corporate mergers in the energy sector. The order will be open for public comment before final implementation.

For further updates on this regulatory development and more news from the Federal Trade Commission, visit their official channels and follow their social media platforms.