Exxon Mobil’s Acquisition of Pioneer Natural Resources Faces Antitrust Scrutiny

Exxon Mobil’s proposed $60 billion acquisition of Pioneer Natural Resources is facing potential antitrust scrutiny, but legal experts suggest that the deal may proceed despite the White House’s criticism of energy companies. The acquisition would grant Exxon ownership of the largest producer in the Permian basin, the largest U.S. oilfield.

U.S. President Joe Biden has expressed concerns about energy companies’ profits and their impact on rising gasoline prices. The White House has urged the Federal Trade Commission (FTC) to investigate deals in the sector for potential anti-consumer behavior. However, antitrust lawyers and experts believe that Exxon’s acquisition of Pioneer, which involves production and exploration, may be easier to defend under antitrust law compared to refinery or retail deals.

While the FTC has not challenged a major merger of oil and gas producers since 2000, recent court losses in attempts to block other megadeals have emboldened companies like Exxon to pursue significant mergers. The FTC’s tolerance for consolidation was demonstrated when it allowed Chevron’s acquisition of PDC Energy earlier this year, despite concentrating a significant portion of production in the Denver-Julesburg basin.

Although Exxon and Pioneer may face a lengthy antitrust review due to the controversy surrounding the deal, experts believe that the companies stand a good chance of completing the acquisition. The Permian basin’s importance in energy production will likely play a significant role in the regulatory analysis.

Exxon’s potential acquisition of Pioneer Natural Resources highlights the ongoing consolidation in the oil and gas industry. As gasoline prices continue to rise, the FTC’s scrutiny of such deals may intensify. However, the global nature of the oil and gas market and the argument that U.S. mergers alone cannot stifle competition based on supply and demand dynamics make it challenging for regulators to block these transactions.