A federal court decision has strongly reaffirmed the Federal Trade Commission's subpoena power in its antitrust investigations of the oil industry.
In a little-noticed ruling handed down late last month, U.S. District Court Judge Harold L. Greene upheld an FTC subpoena issued last fall seeking materials concerning Standard Oil Co. (Ohio) and its recent crude oil sales.
The subpoena is part of the FTC's 5-year-old investigation of the state of thepetroleum industry in the western United States.
Sohio objected to the subpoena, claiming that the FTC was, in effect, on a fishing expedition. The company charged that the requests for information were to too and vague, and that the FTC hasn't given the company proper notice as to what is presently being investigated. The focus of the probe has changed since 1975, Sohio claimed, indicating that the government doesn't really know what it is looking for.
Similar abjections have been raised in other FTC oil industry investigations.
But Judge Greene said the FTC was within its bounds seeking evidence of possible antitrust violations by Sohio through "vertical integration, joint ownership and operating arrangements; and the use of reserve ownership, exploration, transportation, marketing and distribution practices.
"While even these descriptions are in a sense broad," Green wrote in his decision, "they are necessarily so, for their scope is dictated by the breadth of the operations of Sohio and other oil companies and their pervasive impact upon other businesses and indeed the economic fabric of this nation."
Judge Green also discounted Sohio arguments that the documents sought are "trade secrets," and thus confidential in nature. He pointed out that the FTC has the authority to protect the confidentiality of those documents.
In the ruling, the court also gives a rare glimpse of the range of documents requested in the subpoena.
"The documents which the commission seeks relate generally to sales of Alaskan crude oil, their price, costs of transportation, amounts produced, availabilty, and profits; the possible expansion capacity of a pipeline from Alaskan North Slope; and the status of the so-called Pactex pipeline project linking the West Coast and Gulf Coast markets which Sohio has under consideration," the court noted. The FTC also is seeking the mechanisms used by Sohio for establishing the price of oil and the amount it produces and sells, Greene said.
"These are precisely the kinds of information that the public and a government agency concerned with competition and monopoly power are entitled to receive," Judge Green ruled. "It can hardly be thought to be unreasonable substantially for the FTC to exercise its jurisdiction in this area which for far too long has been shrouded in secrecy and mystery," he added.