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The nation’s two antitrust enforcement bodies, the Federal Trade Commission and the Department of Justice’s Antitrust Division, jointly asked the Supreme Court on Tuesday to overturn a California appeals court ruling that a joint venture may not set the same price for separate brands made by its parent companies. The case of Texaco Inc. v. Dagher et al. centers on Equilon, one of two joint ventures formed by Texaco Inc. and Shell Oil Co. to market and distribute gasoline made by the two companies. Fouad N. Dagher, representing individual owners of Shell or Texaco gasoline retailers, argues that Equilon’s sale of Shell and Texaco products at the same price amounts to price-fixing, which is illegal. Central District of California Judge George H. King ruled for the oil companies, only for Judge Stephen Reinhardt of the 9th U.S. Circuit Court of Appeals in San Francisco to overturn him last June. The appellate ruling, which asserts that a joint venture approved by the FTC and four states may not set its own price for the products it sells, has caused a stir in the antitrust bar. “The implications for all kinds of extremely common business practices for joint ventures is huge,” said Roy Englert, a partner at Robbins, Russell, Englert, Orseck & Untereiner who specializes in appellate work. The FTC-DOJ brief notes that “under the terms of the consummated joint venture, petitions granted Equilon an exclusive license to sell gasoline under their brand names [Shell and Texaco] in the Western United States, and they agreed to split Equilon’s profits (or losses) in a fixed ratio based on the assets each contributed to the joint venture.” Englert noted that the joint brief, sought by the Supreme Court, is unusually direct in urging the top court to hear, and then reverse, the lower-court ruling. “The agencies tend to be institutionally conservative in their briefs,” he said, explaining that most briefs take an “on-the-one-hand, on-the-other-hand” look at the reasons for or against hearing a case. But the clarity of the joint recommendation makes it more likely that the Supreme Court will hear the case, probably next year. “The chances are very, very high that the Supreme Court will grant cert,” Englert said. If the Supreme Court lets the appellate decision stand, it would “[interfere] with common business activity, and a lot of common business practices would have to be reconsidered,” Englert said. Copyright �2005 TDD, LLC. All rights reserved.

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