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Minneapolis Star Tribune: Court to consider gasoline price-fixing case

Minneapolis Star Tribune: Court to consider gasoline price-fixing case

Associated Press

June 27, 2005

WASHINGTON — The Supreme Court said Monday it would consider whether to dismiss a lawsuit accusing ChevronTexaco Corp. and Shell Oil Co. of improperly inflating gas prices in the late 1990s.

Justices will review a lower court ruling that allowed the class-action lawsuit by 23,000 gas station owners to proceed. The lawsuit accuses Shell and Texaco of setting up two joint ventures in 1998 to illegally fix gas prices.

The San Francisco-based 9th U.S. Circuit of Appeals ruled the suit should go to trial because of evidence suggesting the venture unfairly restrained trade.

The court noted that when crude oil was at historic lows of $10 to $12 per barrel, the ventures increased the Shell and Texaco brands by 40 cents per gallon in Los Angeles and by 30 cents in Seattle and Portland, Ore.

The ventures, Motiva Enterprises and Equilon Enterprises, operated from 1998 to 2001, when Texaco sold its stake to win approval of its purchase of Chevron. During that time, however, Texaco and Shell continued to maintain separate brand names and competed for customers “at the pump,” according to the ruling.

In a dissent, Judge Ferdinand Fernandez said the ventures were legitimate because they were approved by the Federal Trade Commission and several state attorneys general.

“What could be more integral to the running of a business than setting a price for its goods and services?” Fernandez wrote.

Backing ChevronTexaco and Shell Oil in the appeal were the U.S. Chamber of Commerce and major corporations such as Coca-Cola Co. and Microsoft Corp. They argue in filings that routine pricing decisions by joint ventures would be constantly challenged in court if the lower ruling is allowed to stand.

Lawyers for the gas station operators say distributors paid $1 billion or more in excessive charges, which they will seek to recoup. However, while the distributors passed the alleged excess costs to consumers, consumers wouldn’t necessarily be eligible for refunds.

The cases are Texaco v. Dagher, 04-805 and Shell Oil v. Dagher, 04-814. Arguments will be heard in the court’s next term beginning in October.

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