A committee of oil industry and consumer representatives created to advise the Department of Energy on fuel oil pricing policy represents a dangerous violation of antitrust laws, in the opinion of Sen. Edward M. Kennedy (D-Mass.) and lawyers for one of the oil firms involved.
The committee met on Wednesday to discuss "the reasonableness of gross (profit) margins for any particular distribution level or region of the nation," according to the Jan. 20 Federal Register item announcing the meeting.
In a letter to David Bardin, head of DOE's economic regulatory administration, Kennedy said the meeting "involves clear antitrust violations" and called it "wretched public policy."
There are few principles in antitrust law that can be stated with greater certainty than the proposition that discussions about the 'reasonableness' of margins among competitors are illegal," Kennedy wrote.
Meanwhile, a law firm that represents one of the oil company members of the middle distillate monitoring subcommittee of the fuel oil marketing committee has written for its client an opinion that support Kennedy's stance.
Although the purpose of the meeting was to advise DOE on establishing "benchmarks" representing reasonable" prices for home heating oil in New England last November, the opinion reads, "it is quite likely that the benchmark finally established will affect current and future prices . . ."
Using the benchmark for November, the opinion continues, "it will be a simple operation for companies to plug their current costs into the already established formula for determining benchmarks and arrive at a fairly accurate forecast of the benchmark for the current month."
Because companies will tend to price at or below this figure, it will be, in effect, an informal price ceiling set by DOE with the cooperation and advice of industry members. Stated another way, the companies may be deemed to have agreed on their 'margins' of profit.
"There is no question that this result is prohibited by the antitrust laws."
A spokesman for the Energy Department yesterday defended the meeting.
"The purpose of the advisory committee is to develop hard facts on conditions in the heating oil marketplace to determine whether consumers are being gouged and to determine whether at a later date price controls might be required," he said.
He added the department has taken several steps to avoid antitrust violations, including opening the meetings to the public, making available transcripts, and making attendance voluntary on the part of both industry and consumer members.
"This is an attempt to be responsive to the consumer interest, and we believe it is responsible," he said.