Texaco Inc. v. Dagher
Texaco Inc. v. Dagher | |
---|---|
Argued January 10, 2006 Decided February 28, 2006 | |
Full case name | Texaco Incorporated, Petitioner v. Fouad N. Dagher, et al.; Shell Oil Company, Petitioner v. Fouad N. Dagher, et al. |
Citations | 547 U.S. 1 (more) 126 S. Ct. 1276; 164 L. Ed. 2d 1; 2006 U.S. LEXIS 2023; 74 U.S.L.W. 4147; 2006-1 Trade Cas. (CCH) ¶ 75,143 |
Case history | |
Prior | Summary judgment granted to defendants, Dagher v. Saudi Refining, Inc., C.D. Cal.; affirmed in part, reversed and remanded, 369 F.3d 1108 (9th Cir. 2004); cert. granted, sub nom. Texaco Inc. v. Dagher, 125 S. Ct. 2957 (2005) |
Holding | |
The pricing decisions of a legitimate joint venture between oil companies to sell gasoline to service stations did not violate the Sherman Antitrust Act. Ninth Circuit Court of Appeals reversed. | |
Court membership | |
| |
Case opinion | |
Majority | Thomas, joined by Roberts, Stevens, Scalia, Kennedy, Souter, Ginsburg, Breyer |
Alito took no part in the consideration or decision of the case. | |
Laws applied | |
15 U.S.C. § 1 (§ 1 of the Sherman Antitrust Act) |
Texaco Inc. v. Dagher, 547 U.S. 1 (2006), was a decision by the
Facts
Judgment
District Court proceedings
After Equilon began to operate, a class of 23,000 Texaco and Shell
Ninth Circuit decision
The Ninth Circuit reversed, ruling that the per se rule against price fixing instead applied, which conclusively presumed that the arrangement was illegal.[3] The Ninth Circuit reached that decision by applying the ancillary restraints doctrine, which provided an exception from the rule of reason whenever a restraint on trade was not ancillary to the main purpose of an agreement. The court did not believe the oil companies had explained why the unified pricing for their two brands of gasoline was necessary to further the legitimate goals of the joint venture, and so reversed summary judgment. Texaco and Shell both petitioned for certiorari to the Supreme Court, which consolidated the petitions and granted certiorari to determine the extent to which the per se rule against price fixing applies to joint ventures.
Supreme Court
Justice Clarence Thomas delivered the opinion of the U.S. Supreme Court, in which the other seven participating justices joined in reversing the Ninth Circuit. Significant to the outcome of the case was the Court's presumption that the joint venture itself was legal, which it based on the prior approval by the FTC and the several states involved.
The Court ruled that the Equilon joint venture pricing decisions were not illegal price-fixing between competitors. Texaco and Shell did not compete with one another in the relevant market, but instead participated in that market jointly through their investments in Equilon. The two companies shared in Equilon's profits, and should be regarded as a single entity competing with other sellers in the market, regardless of the decision to market their gasoline under two brands instead of one.
Contrary to the Ninth Circuit's ruling, the Court did not believe that the ancillary restraints doctrine applied because the challenged business practice involved the "core activity" of the joint venture—the pricing of the goods it produced and sold. Even if the doctrine applied, pricing was certainly integral to a business that produced and sold goods.
See also
- US antitrust law
- List of United States Supreme Court cases, volume 547
Notes
- ^ The vote was 8-0; the ninth justice, Samuel Alito, was confirmed to the Court on January 31, 2006 after it had already heard oral argument on January 10, and so did not participate in the decision.
- ^ See In re Shell Oil Co., 125 F.T.C. 769 (1998).
- Ferdinand F. Fernandezfiled a separate decision concurring in part and dissenting in part.
External links
- Text of Texaco Inc. v. Dagher, 547 U.S. 1 (2006) is available from: Google Scholar Justia Oyez (oral argument audio) Supreme Court (slip opinion) (archived)