By John Donovan
The legal preamble to a recent important case being decided by the US Supreme Court spells out the shareholder/ownership of a number of major companies within the Royal Dutch/Shell Group.
For anyone who was unsure about the outcome of the merger brought about by the reserves fraud, The Shell Transport and Trading Company – formally the British 40% partner in the Royal Dutch/Shell Group – is now owned by Royal Dutch Shell Plc. Although Royal Dutch Shell Plc is a UK registered company, it has its HQ in The Netherlands and is 60% owned by the Dutch.
In other words, Royal Dutch took over its British partner. That is not an inappropriate outcome bearing in mind that two successive British Group Chairman – Sir Mark Moody-Stuart and Sir Philip Watts, were responsible for the debacle which brought an end to a hundred year partnership.
The following is part of Shell’s preamble in its legal submission to the Supreme Court.
Petitioner Shell Oil Company is wholly owned by Shell Petroleum, Inc., a Delaware corporation, which is wholly owned by Shell Petroleum N.V., The Hague, The Netherlands. Shell Petroleum N.V. is owned 60% by Royal Dutch Petroleum Company, The Hague, The Netherlands, and 40% by The Shell Transport and Trading Company Limited, London, England. Royal Dutch Petroleum Company is a public company whose majority shareholder is Royal Dutch Shell pic, The Hague, The Netherlands (and of whose stock no other entity owns 10% or more). The Shell Transport and Trading Company Limited is wholly owned by Royal Dutch Shell pic.
The following is a legal report on the case.
Oral Arguments in Dagher case
On January 10, 2006, SCOTUS heard oral arguments in the much anticipated Texaco v Dagher and Shell Oil v Dagher cases. Here’s a link to some discussion and relevant case materials. I have written a short review of the arguments for the ABA’s Supreme Court Preview and will provide a link soon. The case offers some important opportunities for the Court.
The first is to extend the Copperweld rule that a wholly owned subsidiary and a parent are one entity for Section One purposes to the case of a joint venture. The facts of Dagher involve the creation of a joint distribution and marketing venture by Shell Oil and Texaco. The joint venture charged the same price for oil manufactured by Shell and that by Texaco. Dagher, a station owner and named plaintiff in the class action, claimed that the single pricing by the joint venture constituted price fixing between Texaco and Shell Oil. The oil companies argued that pricing was the unilateral choice of a single entity. Although the oil companies cited Copperweld, I think it is unlikely that the court will extend the ruling to joint ventures. The argument remains, as accepted by the Ninth Circuit, that the creation of the venture itself constituted the price fixing.
The Court will also have a chance to revisit the issue of quick look rule of reason and the broader question of characterization. This tack could be an interesting aspect of the decision. A few years in California Dental, the Court seemed to sound the death knell for the quick look approach. But that case involved an FTC action, and the ruling may have rested on the agency’s faulty assumptions and record about anti-competitive effects. The Dagher case is a private antitrust action and may allow the Court to clarify the viability of the quick look approach in private actions.
PS. Note to Shell International Petroleum General Counsel, Richard Wiseman: If anything stated above is inaccurate, we would be grateful for any clarification, which would be published unedited.