As part of its program to maintain competition in the petroleum industry, the FTC aggressively polices
anticompetitive nonmerger activity. If, after investigation, the FTC believes that collusive behavior or
anticompetitive activity by a single firm with market power is the likely cause of higher prices, the FTC
will challenge the conduct, usually by issuing an administrative complaint.
In March 2003, for example, the FTC issued an administrative complaint in an important nonmerger
involving the Union Oil Company of California (Unocal).
The FTC claimed that Unocal violated Section 5 of the FTC Act by subverting the California Air Resources
Board's (CARB) regulatory standard-setting procedures of the late 1980s relating to low-emissions
reformulated gasoline (RFG). The complaint alleged that Unocal misrepresented to both CARB and industry
participants that some of its emissions research was non-proprietary and in the public domain while it
was pursuing a patent that would allow it to charge royalties if CARB used its emissions information.
The complaint further alleged that Unocal's conduct allowed it to acquire monopoly power over the
technology used to produce and supply California "summer-time" RFG, a low-emissions fuel mandated for
sale in the state from March through October, potentially costing California consumers five cents per
gallon more in gasoline prices.
On July 7, 2004, the unanimous Commission reversed the Initial Decision
of the Administrative Law Judge dismissing the complaint, and remanded the matter for a full and
expeditious adjudicative hearing.
In the summer of 2005, following the administrative hearing but before the completion of post-trial briefing, the Commission settled this litigation -- together with its challenge to Chevron Corporation's proposed acquisition of Unocal -- by issuing a consent order that required the parties to stop enforcing the RFG patents that lay at the heart of the litigation and to release all relevant patents to the public. The Commission estimates that this relief has saved California gasoline consumers approximately $500 million per year.