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Supreme Court throws out suit over gas prices

The Supreme Court ruled Tuesday that two oil companies could not be sued over allegations they teamed up to inflate gas prices.
/ Source: Reuters

The Supreme Court ruled Tuesday that Shell Oil Co. and Texaco Inc. cannot be held liable under the antitrust law for their now-defunct joint ventures that had been approved by the federal government and that set the selling price for gasoline.

The justices unanimously overturned a U.S. appeals court ruling that the antitrust law’s automatic prohibition against price fixing applied to the economic arrangements under the two joint ventures set up in 1998 and discontinued in 2001.

The ruling for Shell and Texaco stemmed from a lawsuit brought by 23,000 gas station owners in the western United States who said the two companies conspired to fix prices for their gasoline brands through the joint ventures.

The joint ventures took over the gasoline wholesaling and retailing operations of the two companies. One venture, called Equilon Enterprises, operated in the U.S. West while the other one, Motiva Enterprises, covered the eastern United States.

Texaco left the joint venture when it merged with Chevron Corp. in 2001 to form ChevronTexaco Corp. The company has since changed its name to simply Chevron Corp. Shell Oil is a unit of Royal Dutch/Shell.

Spokesmen from Shell and Chevron said the companies were pleased with the ruling. They said the ventures were reviewed by the Federal Trade Commission and several state attorneys general before they were formed, without any complaints of antitrust violations.

A federal judge in Los Angeles dismissed the lawsuit, but the appeals court ruled it could go forward. It ruled the companies could be held liable because the joint ventures priced Texaco and Shell gasoline the same.

The companies said the Federal Trade Commission approved the joint ventures and that they cannot be held liable. The Justice Department supported them.

The Supreme Court ruled for the two oil companies.

Justice Clarence Thomas concluded in the seven-page opinion that it is not automatically illegal under the antitrust law for a lawful, economically integrated joint venture to set the prices at which the joint venture sells its products.

He said Equilon’s pricing policy may be price fixing in a literal sense, but it is not price fixing in the antitrust sense.