Tuesday, November 20, 2001

State says oil companies
shared wholesale prices

By Tim Ruel

In his work files, local Unocal Corp. officer Ron Sakamoto kept a document that contained details of confidential wholesale gasoline prices used by his firm's competitor Texaco Inc. Next to the file was the business card of George Meldrum, a top Hawaii official for Texaco.

The state found Sakamoto's file during its investigation of an alleged price-fixing conspiracy between Hawaii's major oil companies. Wholesale prices, also known as dealer tank wagon prices, are competitive information that companies would normally want to keep private, said George F. Bishop, an attorney who represents the state in its $2 billion antitrust suit against the oil companies. The state says the firms systematically shared wholesale prices as a way of avoiding real price competition at the consumer level.

Sharing wholesale prices is a small step away from fixing those prices, said Bishop.

In many cases, dealers from competing companies would call each other up regularly to exchange their wholesale prices. Even if the dealers are friends with each other, their bosses should not ask for the prices, said Jeffrey Ono, another attorney representing the state.

Sakamoto later became a top local official with Tosco Corp., another oil company that became a subject of the state's investigation after it bought Unocal's assets in 1997. When the state asked Sakamoto under oath why he had the Texaco file, Sakamoto said he didn't know.

A tape of Sakamoto's deposition was displayed publicly for the first time yesterday before senior U.S. District Judge Samuel King, during a third day of hearings in the 3-year-old antitrust suit. The defendants -- Texaco, Tosco, Unocal, Chevron Corp. and Shell Oil Co. -- are seeking to have the state's counts dismissed without a trial, saying the state doesn't have enough direct evidence of collusion. The state says it has several pieces of evidence that show the oil companies were not engaged in real competition. The hearings are scheduled to continue this morning in federal court.

The state says it has confirmation that Chevron, which operates one of Hawaii's two oil refineries, would sell gasoline to the other oil companies with the silent understanding that the buyers would not seek better prices elsewhere.

Chevron had a such a deal with Unocal between 1992 and 1994, according to a sworn September 2000 statement from Lloyd Toda, a former Unocal employee.

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