The oil industry's tight family circle has been breached by the acrimonious merger struggle between Mobil Corp. and a smaller Conoco Inc., whose officers are calling Mobil names once used by the industry's worst enemies and severest critics.
Names like monopolist.
In a lawsuit filed last week, Conoco asked a federal judge to stop Mobil's attempted takeover by forbidding the larer company from acquiring Conoco stock. Conoco hopes to merge with E. I. duPont de Nemours & Co., and is fighting both Mobil and Seagram Co. of Canada, another unwanted suitor.
Meanwhile, the Justice Department is intently studying the Conoco takeover.
Conoco's suit echoes charges made after the 1973 Arab oil embargo, when the industry faced attack by liberals in Congress and the Federal Trade Commission, whose antitrust suit sought to break up Mobil and the seven other largest oil companies.
"If Mobil can acquire Conoco, Gulf and Texaco an pick off other middle-size oil companies and there could be a significant restructuring of the industry," said Sam Schwartz, Conoco's senior vice president.
The second tier of oil companies, like Conoco beneath Mobil and the other giants, plays an essential role in making the oil business competitive, Schwartz said. Conoco sells 30 percent of its gasoline who generally sell below prices charged by major company stations. Mobil has long followed a policy of not selling gasoline to these companies, Schwartz said.
The independants help hold back the price increases by the majors when gasoline demand is strong, Conoco claims. A Mobil-Conoco merger "would tend to create a monopoly in the retail sale of motor gasoline" in various parts of the country, Conoco charges.
The specter of giant oil companies threatening to gobble up the little guys -- and the not so little companies like Conoco who supply the independants -- is just what the FTC was worried about in its 1973 suit charging the majors with antitrust violations.
The FTC, however, dropped the oil case recently after eight years, leaving Mobil and the other majors relatively unscathed.
Mobil can claim a political vindication. The liberal attack on the oil industry reached a high-water mark in the fall of 1975 when the Senate came within a half dozen votes of passing a bill to break up the largest oil companies.
Today such a move probably would get only a half dozen votes at most and the political push is coming from the other direction. If the FTC hadn't dropped the oil case, it probably would have faced another bruising confrontation with Congress.
In announcing its offer to take over Conoco, Mobile tackled the antitrust issue head on, saying there was nothing in the law, judicial decisions or Justice Department policies standing in the way of the merger.
Since the oil, chemical and other businesses that Mobil and Conoco compete in aren't dominated by a few firms, Mobil said, the takeover would satisfy Justice Department guidelines as long as each of the companies has less than 5 pecent in each segment of the market where they compete.
Mobil and Conoco pass that test, Mobil said. It as 3.1 percent of domestic crude oil production, while Conoco has 1.5 percent. Mobil sells 6.2 percent of the nation's gasoline; Conoco sells 2.5 percent. The figures are similar in other areas where the two companies compete such as chemical and uranium production, Mobil says.
Schwartz said he isn't claiming the industry is monopolized by Mobil or anyone else. "I'm not trying to knock all the big brothers," he said. "I think the industry has been fiercely competitive and wouldn't want to allege that the industry, as it's now structured, has any significant anticompetitive elements. It serves the consumer well."
But middle-size companies like Conoco would be sorely missed, he added. The percentages Mobil cites aren't the whole story, Schwartz continued.
Mobil and Conoco rank Nos. 1 and 2, respectively, in ownership of the pipeline systems that gather crude oil from fields and transport it to refineries. A merger could enable Mobil to exert "substanital economic power" over independent crude oil producers because of its greater control over gathering pipelines, Conoco claims.
Conoco may have other reasons for bringing the suit beyond a concern for competition, neutral antitrust lawyers say. A ruling against Mobil by the court or the Justice Department could put it far behind other competitors in the scramble for Conoco stock and the, presumably, is what Conoco is hoping for.