Texaco Inc. v. Dagher - Oral Argument - January 10, 2006

Texaco Inc. v. Dagher

Media for Texaco Inc. v. Dagher

Audio Transcription for Opinion Announcement - February 28, 2006 in Texaco Inc. v. Dagher

Audio Transcription for Oral Argument - January 10, 2006 in Texaco Inc. v. Dagher

John G. Roberts, Jr.:

We'll hear argument first in Texaco Inc. v. Dagher and Shell Oil v. Dagher.

Mr. Nager.

Glen D. Nager:

Thank you, Mr. Chief Justice, and may it please the Court--

In this case, the Court of Appeals of the Ninth Circuit held that a decision to unify the prices charged for the two branded gasoline products sold by a joint venture created by Shell and Texaco could be deemed a per se violation of section 1 of the Sherman Act.

The Ninth Circuit's decision is plainly wrong.

A joint venture has to be able to and is entitled to create and set the prices for the products that it sells.

David H. Souter:

Mr. Nager, on... on that point, I have a factual question and I figured I'd get it... excuse me... get it out on the table at the beginning so you'd know what at least is bothering me.

The nub... the nub of your factual argument is, as you just... just stated it, there's a joint venture here and joint ventures price their products.

The factual question that I have is this.

This is... or the preface for it is this.

This is a joint venture that has continued to market, in effect, the same product that the... that the two companies marketed beforehand, and it has done so, ostensibly, under the old brand names.

Therefore, the fact that there is a joint venture doesn't necessarily disclose that there is a new product as... as might be the case normally which you would expect the joint venture to set its own price for.

Therefore, it seems to me that if the joint venture is clearly going to cover pricing, the joint venture agreements, the documents that indicated the joint venture at the beginning, should have mentioned pricing.

And yet, my understanding is that they did not do so, and in fact, the claim on the other side, as I recall the briefs, is that when the Government looked at the joint venture, prior to its going into effect, nothing was said about fixing prices... setting prices.

So my question is, did the joint venture, as indicated by documentation, say in any... so many words that the joint venture is going to set prices for these two... or for the... the... whatever it... whatever it sells?

And... and number two, if... if the answer to that is no, should we regard the joint venture as covering pricing?

Glen D. Nager:

I believe the... the short answer to your question is... is yes.

David H. Souter:

There were two questions.

Which?

[Laughter]

Glen D. Nager:

The first question.

David H. Souter:

Okay.

Glen D. Nager:

I think it is undeniable... and Mr. Minear can speak on behalf of the FTC to this.

I think it is undisputed that the Government understood that this joint venture was a consolidation of both the refining assets of the two companies, as well as the marketing functions of the two companies, and that it would own the gasoline and it would decide how to sell it and what price to sell it at.

I don't--

David H. Souter:

Is there a document that we could look at that... that says that?

Glen D. Nager:

--I don't know off the top of my head, Justice Souter, whether there's a specific document that says marketing includes pricing.

But I don't think that anyone had any doubt that this included pricing.

And indeed, the respondents, of course, in bringing their challenge, haven't framed this as a challenge to the ability and right of the joint venture to set its prices.

What they've challenged is the subsequent decision that was made to sell the Texaco branded Equilon gasoline and the Shell branded Equilon gasoline at the same price.