Court reinstates
price-fixing lawsuit
SAN FRANCISCO >> A federal appeals court reinstated a lawsuit yesterday accusing ChevronTexaco Corp. and Shell Oil Co. of operating a price-fixing conspiracy.
The suit accuses the companies' joint ventures -- Motiva Enterprises and Equilon Enterprises -- as being part of a plan by the oil giants to inflate fuel prices beginning in 1998 and ending as early as 2001, when Texaco sold its stake to win approval of its purchase of Chevron.
Judge Stephen Reinhardt, while noting that Texaco and Shell charged the same for gasoline after the formation of the joint ventures, ruled that "the very purpose of the alliance was to eliminate competition in order to realize efficiency gains and gain market share."
Reinhardt, writing for a three-judge panel of the 9th U.S. Circuit Court of Appeals, said a jury must decide whether two competitors that agreed to charge the same for gasoline created the alliance "to restrict competition." Between September 1998 and February 1999, when crude oil was at historic lows of $10 to $12 per barrel, Equilon increased the Shell and Texaco brands 40 cents per gallon in Los Angeles and 30 cents in Seattle and Portland, Ore., Reinhardt said.
U.S. District Judge George King dismissed the case in 2002, which was brought by 23,000 gasoline vendors. King ruled that a jury could not find that the companies "formed Equilon and Motiva merely to achieve an ulterior anticompetitive purpose or that the ventures are patently anticompetitive."
In a sharp dissent yesterday, Judge Ferdinand Fernandez agreed.