A jury in Durham, N.C., has found that Union Oil Co. and at least one other major oil company conspired to reduce competition in gasoline marketing by trying to drive a maverick marketer out of business.
The case could affect similar pending suits and generate more legal action if last week's decision is upheld.
A rural North Carolina oil jobber, Lee-Moore Oil Co., charged that major oil companies contrived an artificial shortage in early 1973, before the Arab oil embargo, by declining to import additional oil. The conspiracy was aimed at driving maverick oil marketers out of the market to keep them from depressing prices of major brands by fierce competition at the retail level, according to allegations in the Durham case.
The jury found Union liable for a total of $162,621 in treble damages for the economic harm the conspiracy caused the smaller company. Union has filed a motion asking a judge to overturn the jury verdict.
Similar charges are the basis for a suit filed by five states that is pending in federal court in Los Angeles against most of the major oil companies. A Federal Trade Commission antitrust suit aimed at breaking up the nation's eight largest oil companies also contained similar charges, but the FTC decided to drop that effort last year.
Lee-Moore was notified in September 1972 that Union was cancelling a contract under which Union sold gasoline and other petroleum products to Lee-Moore, which then sold them to Union-brand retailers. As a result, Lee-Moore was unable to supply Union-branded products to those customers, Lee-Moore's attorney, Irving Saul, told the jury.
Amoco was willing to supply some products to Lee-Moore, but only for resale to a few specified stations. That left Lee-Moore able to offer only unbranded products to its other customers.
Lee-Moore claimed that it paid one to 20 cents more a gallon for gasoline as a result and that the retail stations that switched to independent brands lost the benefit of Union's advertising and credit cards. Some stations stopped buying from Lee-Moore, the company said.
Lee-Moore argued that its troubles were the result of a conspiracy by Union and at least one of the following companies: Exxon, Shell, Gulf, Phillips and Cities Service.
According to Saul, at the time the contract was canceled there was a history of price wars that had kept prices down. At the same time, major oil companies began to look more at their "downstream" operations, including retail stations, as a source of revenue, he said.
Some marketers, such as Lee-Moore, were identified by major companies as less profitable than others, Saul said. As a result, when the so-called shortage occurred in 1973, they began to cancel contracts with those marketers.
Lee-Moore claimed that the shortage was induced by the companies themselves.