Chevron, Mobil, Shell Oil to settle price-fixing suit

January 12, 1993|By Los Angeles Daily News

LOS ANGELES -- Three major oil companies have agreed to pay $77 million to settle a nearly 18-year-old gasoline price-fixing lawsuit filed on behalf of consumers in four Western states, officials said.

The settlement announced yesterday with Chevron Corp., Mobil Oil Co. and Shell Oil Co. includes $65.5 million in cash and $11.5 million in vouchers that businesses and nonprofit groups can use to purchase fuel.

It concludes a 1975 lawsuit that charged 10 major oil companies with conspiring to eliminate competition and raise gasoline and petroleum product prices during the 1960s and 1970s. Arizona, Oregon and Washington also joined in the suit. Counting the $77 million figure agreed upon by Chevron, Mobil and Shell, the 10 defendants now have agreed to settle the suit for $151 million.

Amoco Corp., Atlantic Richfield Co., Conoco Inc., Exxon Corp., Phillips Petroleum Co., Texaco Inc. and Unocal Corp. reached earlier agreements with prosecutors.

A jury trial was scheduled to start Feb. 3 in federal court in Los Angeles.

"Only as the case got closer to trial did some of the defendants get serious about settling," California Deputy Attorney General Tom Dove said.

Under the settlement, the oil companies do not acknowledge any wrongdoing.

"We are delighted to lay this interminable and groundless case to rest," said Charles Renfrew, a Chevron vice president and head of the company's legal department. "Chevron expected to ultimately prevail in this case because there was absolutely no wrongdoing. But we felt it was prudent to settle, given the financial risks inherent in presenting such a complex matter to a jury in a lengthy trial."

Robert J. McCool, executive vice president in charge of U.S. marketing and refining for Mobil, agreed.

"We have been forced to devote a great amount of time and attention and substantial legal expenses to this litigation. Now, we were faced with the prospect of lengthy and expensive jury trials and many years of appellate litigation after that," he said.

Terms of the settlement call for Chevron, Mobil and Shell to bear the brunt of the costs because they were the biggest players in the four-state market during the time frame included in the suit, Mr. Dove said.

As part of the settlement, companies and other organizations that qualify each will be able to receive up to four vouchers worth a total of $20 in credit toward the purchase of gasoline, depending upon how much was purchased between 1971 and 1981.

Information detailing how to obtain the vouchers for gasoline will appear in major newspapers throughout the state before the end of the month, Mr. Dove said.

The initial lawsuit was filed by former California Attorney General Evelle Younger and eventually was combined into one federal court action with other suits.

The suit was dismissed in U.S. District Court in Los Angeles in 1986, but the 9th Circuit Court of Appeals in San Francisco reinstated the case in 1990 after it found sufficient evidence to warrant a jury trial.

Mr. Dove said California's share of the full $151 million 10-company settlement could be in the $75 to $80 million range.

The agreement is subject to federal court approval.

The lawsuit claimed oil companies kept petroleum product prices artificially high by communicating directly with each other and through oil industry publications.

It also contended that the companies contrived a shortage of gasoline in the early to mid-1970s and used it to justify price increases and reduced contract supplies to state and local government purchasers.

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