Suit: Oil giants fixed prices for 23,000 gas station owners
AP / USA TODAY
August 22, 2007
SAN FRANCISCO, CA — Nearly two dozen gas station owners in California sued Shell Oil, Chevron and Saudi Refining, on Tuesday, claiming the companies conspired to fix prices for 23,000 franchise owners nationwide.
The case filed in U.S. District Court in San
Francisco seeks class-action status for the plaintiffs. It is similar
to another lawsuit filed in 2004 by other California gas station owners
that was thrown out by the U.S. Supreme Court last year. The new group
of plaintiffs hopes the court will consider a slightly different
argument.
Like the previous case, the plaintiffs in this
case say chairmen of the three oil companies met privately nearly every
month starting in March 1996 for the "purpose of forming and organizing
a combination." The lawsuit alleges executives destroyed documents from
the meetings, and a defunct joint venture violated U.S. antitrust laws
and caused artificially high wholesale gas prices in nearly every state
from 1999 to 2001.
In a new twist, the plaintiffs now say the venture violates a "rule of reason" governing antitrust matters.
A Chevron spokeswoman, Stephanie Price, said the
San Ramon-based company has not seen the lawsuit and she couldn’t
discuss specifics. She did say Chevron, which acquired Texaco in 2001,
was vindicated last year when Chief Justice John Roberts blasted the
previous case for its "very artificial hook."
The lawsuit hinges on a marketing deal that,
plaintiffs say, allowed former rivals to collude on prices starting in
1998, when Shell and Texaco formed Equilon Enterprises to market
gasoline in western states. They formed Motiva Enterprises LLC later
that year for the eastern half of the country. Houston-based Saudi
Refining also joined Motiva.
Equilon and Motiva began operating when
inflation-adjusted crude oil prices hit their lowest levels since the
Great Depression, according to San Francisco-based lawyer Joseph M.
Alioto, who represented plaintiffs in both the old and new cases. Yet
gas prices soared for franchise owners, forcing them to pass on the
cost to consumers or cut profit margins.
"These executives get together and say, ‘OK,
we’re going to raise Texaco’s price to Shell’s price, then we’re going
to raise both of them 50 to 75%, and we’re going to do it after we’ve
already had all these cost savings,’" Alioto said.
The lawsuit doesn’t seek a specific financial
award. Alioto argues wholesale prices were higher by at least 20 cents
a gallon and possibly as much as 40 cents per gallon from 1999 to 2001.
Since an average gas station in the United
States pumps about 100,000 gallons per month, Alioto says the energy
companies owe each of the 23,000 station owners at least $240,000.
Station owners had little choice but to pay
higher prices. Franchises typically sign long-term contracts with oil
suppliers, making it tough to switch to another brand or an independent
supplier.
A spokesman for the state-owned oil company of
Saudi Arabia, of which Saudi Refining is a subsidiary, said they had
received no official notification of a lawsuit. Representatives did not
return phone calls and e-mails to Houston-based Shell, a subsidiary of
the Royal Dutch/Shell Group.