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Suit: Oil giants fixed prices for 23,000 gas station owners
Key Excerpts from Article on Website of USA Today/Associated Press
Posted: August 29th, 2007
http://www.usatoday.com/money/industries/energy/2007-08-22-g...
Nearly two dozen gas station owners in California [have] sued Shell Oil, Chevron (CVX) and Saudi Refining ... claiming the companies conspired to fix prices for 23,000 franchise owners nationwide. The plaintiffs ... 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. 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 [and] Motiva Enterprises LLC. Equilon and Motiva began operating when ... crude oil prices hit their lowest levels since the Great Depression, according to ... lawyer Joseph M. Alioto, who [represents] the plaintiffs. 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. [He] 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. 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.
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