Carb Gas Cartel Plaintiffs Prevail in 9th Circuit

In William O. Gilley Enterprises Inc. et al. v. Atlantic Richfield Co. et al., a divided 9th Circuit panel found that plaintiffs’ argument – that 44 individual bilateral agreements among the oil companies had the same aggregate anti-competitive effect as a conspiracy – was enough to establish a claim under Section 1 of the Sherman Act.  The majority found that 1) because the exchange agreements between the oil companies to raise prices by controlling supply of CARB gas are considered contracts under federal antitrust law, each agreement, “even without intent to control prices, provides an agreement that meets the first element of a [section]1 Sherman Act claim”; and 2) plaintiffs could establish market power and anti-competitive effects by examining the “cumulative effect of a single defendant’s exchange agreement” even though each individual agreement only affected a small portion of CARB gas in the state.  The court pointed out that aggregation need not be found only where contracts have “a clear purpose and an identifiable effect”; if a defendant restrains trade by an obvious pattern and practice of entering into individual contracts, such “defendant should not be allowed to do piecemeal what he would be prohibited from doing all at once.”   

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