Price-Fixing Suit Against Oil Firms Is Allowed : Supreme Court: Western states have accused the major oil companies of a scheme to create gas shortages nearly 20 years ago.

WASHINGTON —  The Supreme Court cleared the way Monday for a jury trial in a lawsuit accusing the nation’s major oil companies of fixing prices and limiting supplies of gasoline in four Western states in the early 1970s.

The court, without comment, left intact a ruling that had revived the suit.

The companies--including Union Oil of California and Atlantic Richfield Co., both of Los Angeles, and San Francisco-based Chevron Corp.--were accused by officials in California, Oregon, Washington and Arizona of a scheme to rig prices and then cause gas shortages culminating around the time of the Arab oil embargo nearly 20 years ago.

The case, which has generated 4 million pages of legal documents, had been dismissed by a federal judge in 1986 after more than 10 years of pretrial maneuvering.

But the U.S. 9th Circuit Court of Appeals revived the suit in January.

The appeals court, relying on a 1986 Supreme Court ruling in an unrelated antitrust conspiracy case, said there is enough evidence to send the suit to trial.

The state officials said evidence of a conspiracy included swings in gasoline prices in the late 1960s and early 1970s that indicated that the oil giants were acting in concert.

By eliminating discounts to gasoline dealers, the officials said, one company’s retail prices would rise sharply and the other companies’ would follow. Usually the prices would come down at a slower pace, the states said.

The increases were too steep for one company to act alone and risk losing business, the states’ suit said.

It also cited press releases heralding price rises as further evidence of collusion, asserting that announcing the increases in advance served no purpose other than to alert competitors.

The states said there is evidence dating to the late 1950s of officials from different companies discussing pricing strategies.

“The press releases, price postings and evidence of competitor contacts . . . provide evidence of a conspiracy,” the 9th Circuit court said.

Moreover, the appeals court said, the up-and-down price fluctuations ended in August, 1972, when “the pressure created by supply shortages was sufficient to keep” prices at a high level.

The states alleged that the companies caused the shortages by exchanging information on production levels and expected consumer demand, while conspiring to limit overseas oil imports.

The other oil companies that sought to kill the suit are Exxon Corp., Mobil Corp., Shell Oil and Texaco Inc.

Their appeal was supported by the Business Roundtable, made up of chief executives of 200 companies.

The oil companies and the Business Roundtable said the 9th Circuit court ruling exposes businesses to enormous liability in lawsuits based on ambiguous evidence.

HIGH COURT ROUNDUP: A1