- The Washington Times - Tuesday, February 28, 2006


The Supreme Court yesterday threw out a lawsuit that accused two oil companies of inflating gas prices by at least $1 billion.

Justices unanimously said gas distributors did not prove that Chevron Corp. and Shell Oil Co., a U.S. subsidiary of Royal Dutch Shell PLC, violated antitrust laws in the joint venture, which ended four years ago.

Justice Clarence Thomas, writing for the court, said the companies had a legal partnership.

“The pricing decisions of a legitimate joint venture do not fall within the narrow category of activity that is per se unlawful” under federal law, he said.

At the time of the deal in 1998, Texaco was independent from Chevron. The company joined with Shell to form enterprises to handle refining and marketing of its gasoline.

Gas distributors filed a class-action lawsuit in California, charging that Texaco and Shell had used the partnership to fix gas prices in violation of antitrust law.

A ruling in favor of the gas distributors would have had broad implications for business mergers beyond the oil industry.

Representatives of Chevron and Shell lauded the decision.

“As the Supreme Court noted, the joint venture, which no longer exists, was extensively reviewed and approved by the federal government’s antitrust enforcement agency, the Federal Trade Commission,” Chevron spokesman Donald Campbell said. “It was also reviewed by four state attorneys general, who similarly concluded that the venture was not anti-competitive.”

A lawyer for the plaintiffs did not return a call for comment.

The case was argued at the court last month, and justices signaled then that they were not concerned that the giant gas companies went too far. Chief Justice John G. Roberts Jr. said joint ventures must price their products, and that it should not matter whether they are sold as a new brand or under the Shell and Texaco labels.

Gas price-fixing has been a sensitive subject during the past year for Americans, who experienced surging prices that exceeded $3 a gallon in many parts of the country, especially after Hurricane Katrina damaged critical energy infrastructure on the Gulf Coast and prices soared.

Justice Samuel A. Alito Jr. did not participate in the case because he was not on the court when the appeal was argued.

Shares of Chevron fell 62 cents, or 1.1 percent, to close at $56.48 on the New York Stock Exchange, and those of Royal Dutch Shell declined by 43 cents to $60.48.

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