Case That Alleges 9 Oil Firms Fixed Prices Is Rejected

A Superior Court judge in San Diego has sided with nine major oil companies by throwing out a lawsuit claiming that the industry conspired to raise prices on California’s new, cleaner-burning gasoline.

The class-action suit, filed in June 1996, contended that the nine oil refiners worked together to increase prices by restricting the supply of the reformulated gasoline.

California refiners have been required by the California Air Resources Board to produce the cleaner gas since March 1996. Since then, supplies of the reformulated gasoline have been tight and prices have been mostly higher.

The oil companies said higher prices were the result of market forces and of the higher cost of producing the gasoline.

Judge David Danielsen on Friday granted a motion for summary judgment in favor of defendants Arco, Chevron Corp., Exxon Corp., Mobil Oil Corp., Shell Oil Co., Texaco Inc., Tosco Corp., Ultramar Corp. and Unocal Corp.

In a 24-page ruling, Danielsen found that the defendants provided only circumstantial evidence that was “insufficient to suggest an agreement in restraint of trade.”

“Plaintiffs have attempted to weave a thread of conspiracy through a wide range of activities engaged in by defendants and argue that through these activities defendants have created an institution by which pricing decisions are coordinated,” Danielsen ruled.

“While the evidence suggests that each defendant searched out and obtained as much information as it could on its competitors’ plans, such a search does not offend antitrust liability without evidence that those plans were coordinated to restrict trade,” Danielsen said. The evidence “does not support even the inference of such an agreement.”

The oil companies applauded the ruling. Arco, in a statement, said it was “gratified.”

“As we’ve said many times, the price increases that occurred following the introduction of [reformulated] gasoline were the result of market forces, not conspiracies,” the Arco statement said. “The judge’s opinion is in line with the findings of several governmental investigations, none of which found any evidence that refiners conspired to raise prices.”

“It’s the marketplace that sets the right price . . . and we take the marketplace as we find it,” said Chevron spokesman Fred Gorell, noting that the U.S. Justice Department in March closed a 10-month investigation into similar price-fixing allegations without taking action.

Attorneys for the plaintiffs said they would ask Danielsen for a new trial based on what they described as new information recently uncovered.

The information includes recent exports of huge amounts of gasoline that could have been sold in the California market, as well as secret oil company documents that support the charges of industry collusion, said Timothy Cohelan, a San Diego attorney representing the class-action plaintiffs.

If Danielsen does not grant the motion for a new trial, the case will be pursued in the court of appeals, he said.

“We’re fighting back, and it’s not over,” Cohelan said.

A jury trial had been set to start Nov. 7.