The Supreme Court issued a much anticipated opinion in Texaco Inc. v. Dagher, a case challenging the pricing practices of a joint venture among oil companies. Shell Oil and Texaco formed a joint venture, Equilon Enterprises, to refine and sell gasoline in the western US under the two companies' original brand names. When Equilon set the price for both brand names, Texaco and Shell Oil service stations sued and alleged per se unlawful price fixing.
The district court granted summary judgment in favor of Texaco and Shell Oil. It held that the rule of reason, not the per se rule, applied. As the plaintiffs failed to assert a rule of reason claim in their complaint, they could not possibly win. The Ninth Circuit reversed, holding that Equilon's pricing decision was a per se unlawful price-fixing agreement between two competitors.
Much to the relief of businesses everywhere, the Supreme Court unanimously reversed. It held that a lawful, economically integrated joint venture obviously must be able to set prices for its own products. Duh. (How's that for erudite commentary?)
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