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SAN FRANCISCO -- A federal appellate court in San Francisco has reinstated an antitrust suit alleging that Shell Oil Co. and Texaco Inc. conspired to fix gasoline prices via joint marketing ventures, reported Reuters.
The ruling by the U.S. Ninth Circuit Court of Appeals comes as Californians pay the highest gas prices in the nation -- more than $2.30 per gallon -- and a state Senate committee prepares to investigate gas prices.
Operators of about 40 gas stations in the Los Angeles area sued Shell and Texaco for allegedly setting up two joint ventures in 1998 -- Equilon Enterprises in the western United States and Motiva Enterprises in the east -- that conspired to fix gas prices.
The alliance had a national market share of 15 percent of all gas sales and on the West Coast, Equilon's market share topped 25 percent, according to the ruling. The joint-venture partners believed they would save as much as $800 million a year, according to the appellate court.
U.S. District Court Judge George King in Los Angeles had dismissed the suit. But Ninth Circuit Judge Stephen Reinhardt, writing for a three-judge panel, ruled that "the creation of the alliance ended competition between Shell and Texaco throughout the nation in the areas of downstream refining and marketing of gasoline."
Reinhardt wrote that the "price optimization program may have allowed Equilon and Motiva to raise gasoline prices at a time when the price of crude oil was low and stable" between September 1998 and February 1999.
A Shell spokesman said the company was "disappointed in the court's decision and at this point we are reviewing the opinion in greater detail to determine our best course of action going forward."
A ChevronTexaco spokesman was not immediately available to comment.
The case could be retried early next year depending on the outcome of any appeals.