Reagan Administration Abandoning Giant Antitrust Case Against Big-Oil Eight

The U.S. government is abandoning its giant antitrust case against the big eight oil companies, a move which reveals both the laxness of the Reagan Administration's antitrust policy and, more fundamentally, the incapacity of the court system to deal with stalling tactics by multinational corporations and their legal counsels.

In 1973, the Federal Trade Commission (FTC) began legal proceedings against Exxon, Texaco, Gulf, Mobil, Standard Oil of California, Standard Oil of Indiana, Shell, and Atlantic Richfield.

The FTC charged the companies with a range of anti-competitive practices: maintaining artificially high prices in the petroleum production and refining stages by having one of the companies set the price level and the others follow; limiting the supply of refined petroleum to independent marketers by forming processing agreements with independent refiners; increasing barriers to entry by keeping artificially high profits at the crude level and low profits at the refining level; refusing to sell refined petroleum to independent marketers; and collusive pricing in the marketing of refined petroleum.

This oligopolistic behavior, the FTC charged, created excess profits for the oil companies and increased prices to consumers.

On June 23 this year, the FTC's prosecuting lawyers "recommended that the Commission dismiss the complaint in this case." This decision, which awaits approval by the full Commission, is a "sign to the oil industry that it has practically no reason to worry on antitrust grounds," says Michael Podhorzer, associate director of Energy Watch, a Washington-based consumer group.

The major reason for the dismissal, according to the FTC's filing, is that "the classic pitfalls of excessive delay" made it "unlikely that the continuation of the case can accomplish `a timely and meaningful resolution' of the antitrust violations." The delay, which was caused by stalling tactics of the company law firms and by interagency disputes within the government, has left the case virtually in the starting blocks. "Eight years after its inception, (the case) is still in the midst of pretrial discovery phase," the FTC filing noted. "This case could continue without a final judgment on the merits or implementation of remedial provisions until 15 or 20 years after the filing of the complaint," the FTC complaint counsel wrote.

"The oil companies win by deferring everything," said Podhorzer. Because of the ability of companies and their lawyers to issue round after round of preliminary trial motions, to challenge the government on procedural grounds in court, and to spend years collecting documents, "the courts don't offer much hope for getting control of Big Oil," Podhorzer concluded.

In this case, the oil companies issued approximately 500 pretrial motions, subpoenaed documents from over a dozen federal agencies, and filed numerous lawsuits against the government, fighting the case on procedural grounds all the way to the Supreme Court, which nevertheless ruled that the government did have the right to pursue the case.

If the settlement is approved by the five commissioners of the FTC, the oil companies will have won a significant victory. The corporations have not agreed to pay any fines, nor to admit any guilt or wrongdoing. All that they are offering the government in return for its dismissal of charges is government possession of the documents produced for the case. These documents will not be open to the general public, nor will they be obtainable under the Freedom of Information Act.