Texaco Inc. v. Dagher

Facts of the Case

Petitioners, Texaco Inc. (Texaco) and Shell Oil Co. (Shell), collaborated in a joint venture, Equilon Enterprises, to refine and sell gasoline in the western United States under the two companies’ original brand names. After Equilon set a single price for both brands, respondents, Texaco and Shell Oil service station owners (owners), brought suit alleging that, by unifying gas prices under the two brands, Texaco

Question

Does Section 1 of the Sherman Act always prohibit a lawful joint venture from setting the prices at which its goods will be sold?

CONCLUSION

No. In an 8-0 decision (Justice Alito not participating), the Court ruled that the per se rule against price-fixing should not be applied to price-setting by joint ventures. The opinion by Justice Clarence Thomas held that though Equilon’s pricing policy may be price fixing in a literal sense, it is not price fixing in the antitrust sense. The Court distinguished ‘horizontal’ price-fixing schemes between competitors, which are per se illegal, from the internal pricing decisions of a legitimate joint venture, which are not.

Case Information

  • Citation: 547 US 1 (2006)
  • Granted: Jun 27, 2005
  • Argued: Jan 10, 2006
  • Decided Feb 28, 2006