Texaco Inc. v. Dagher, No. 04-805.

CourtUnited States Supreme Court
Writing for the CourtThomas
Citation164 L. Ed. 2d 1,126 S. Ct. 1276,547 U.S. 1
Decision Date28 February 2006
Docket NumberNo. 04-805.
PartiesTEXACO INC. <I>v.</I> DAGHER et al.
547 U.S. 1
126 S. Ct. 1276
164 L. Ed. 2d 1
TEXACO INC.
v.
DAGHER et al.
No. 04-805.
Supreme Court of United States.
Argued January 10, 2006.
Decided February 28, 2006.*

Petitioners, Texaco Inc. and Shell Oil Co., collaborated in a joint venture, Equilon Enterprises, to refine and sell gasoline in the western United States under the two companies' original brand names. After Equilon set a single price for both brands, respondents, Texaco and Shell Oil service station owners, brought suit alleging that, by unifying gas prices under the two brands, petitioners had violated the per se rule against price fixing long recognized under § 1 of the Sherman Act, see, e. g., Catalano, Inc. v. Target Sales, Inc., 446 U. S. 643, 647. Granting petitioners summary judgment, the District Court determined that the rule of reason, rather than a per se rule, governs respondents' claim, and that, by eschewing rule of reason analysis, respondents had failed to raise a triable issue of fact. The Ninth Circuit reversed, characterizing petitioners' position as a request for an exception to the per se price-fixing prohibition, and rejecting that request.

Held: It is not per se illegal under § 1 of the Sherman Act for a lawful, economically integrated joint venture to set the prices at which it sells its products. Although § 1 prohibits "[e]very contract [or] combination ... in restraint of trade," 15 U. S. C. § 1, this Court has not taken a literal approach to that language, recognizing, instead, that

[547 U.S. 2]

Congress intended to outlaw only unreasonable restraints, e. g., State Oil Co. v. Khan, 522 U. S. 3, 10. Under rule of reason analysis, antitrust plaintiffs must demonstrate that a particular contract or combination is in fact unreasonable and anticompetitive. See, e. g., id., at 10-19. Per se liability is reserved for "plainly anticompetitive" agreements. National Soc. of Professional Engineers v. United States, 435 U. S. 679, 692. While "horizontal" price-fixing agreements between two or more competitors are per se unlawful, see, e. g., Catalano, supra, at 647, this litigation does not present such an agreement, because Texaco and Shell Oil did not compete with one another in the relevant market—i. e., gasoline sales to western service stations—but instead participated in that market jointly through Equilon. When those who would otherwise be competitors pool their capital and share the risks of loss and opportunities for profit, they are regarded as a single firm competing with other sellers in the market. Arizona v. Maricopa County Medical Soc., 457 U. S. 332, 356. As such, Equilon's pricing policy may be price fixing in a literal sense, but it is not price fixing in the antitrust sense. The court below erred in reaching the opposite conclusion under the ancillary restraints doctrine, which governs the validity of restrictions imposed by a legitimate joint venture on nonventure activities. That doctrine has no application here, where the challenged business practice involves the core activity of the joint venture itself—the pricing of the very goods produced and sold by Equilon. Pp. 5-8.

369 F. 3d 1108, reversed.

THOMAS, J., delivered the opinion of the Court, in which all other Members joined, except ALITO, J., who took no part in the consideration or decision of the cases.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Glen D. Nager argued the cause for petitioners in both cases. With him on the briefs for petitioner in No. 04-805 were Craig E. Stewart, Joe Sims, and Louis K. Fisher. On the briefs for petitioner in No. 04-814 were Ronald L. Olson, Bradley S. Phillips, Stuart N. Senator, and Paul J. Watford.

Jeffrey P. Minear argued the cause for the United States as amicus curiae urging reversal in both cases. With him on the brief were Solicitor General Clement, Acting Assistant Attorney General Barnett, Deputy Solicitor General Hungar, Catherine G. O'Sullivan, and Adam D. Hirsh.

[547 U.S. 3]

Joseph M. Alioto argued the cause for respondents in both cases. With him on the brief were Daniel R. Shulman and Gregory Merz.

JUSTICE THOMAS delivered the opinion of the Court.


From 1998 until 2002, petitioners Texaco Inc. and Shell Oil Co. collaborated in a joint venture, Equilon Enterprises, to refine and sell gasoline in the western United States under the original Texaco and Shell Oil brand names. Respondents, a class of Texaco and Shell Oil service station owners, allege that petitioners engaged in unlawful price fixing when Equilon set a single price for both Texaco and Shell Oil brand gasoline. We granted certiorari to determine whether it is per se illegal under § 1 of the Sherman Act, 15 U. S. C. § 1, for a lawful, economically integrated joint venture to set the prices at which the joint venture sells its products. We conclude that it is not, and accordingly we reverse the contrary judgment of the Court of Appeals.

I

Historically, Texaco and Shell Oil have competed with one another in the national and international oil and gasoline

547 U.S. 4

markets. Their business activities include refining crude oil into gasoline, as well as marketing gasoline to downstream purchasers, such as the service stations represented in respondents' class action.

In 1998, Texaco and Shell Oil formed a joint venture, Equilon, to consolidate their operations in the western United States, thereby ending competition between the two companies in the domestic refining and marketing of gasoline. Under the joint venture agreement, Texaco and Shell Oil agreed to pool their resources and share the risks of and profits from Equilon's activities. Equilon's board of directors would comprise representatives of Texaco and Shell Oil, and Equilon gasoline would be sold to downstream purchasers under the original Texaco and Shell Oil brand names. The formation of Equilon was approved by consent decree, subject to certain divestments and other modifications, by the Federal Trade Commission, see In re Shell Oil Co., 125 F. T. C. 769 (1998), as well as by the state attorneys general of California, Hawaii, Oregon, and Washington. Notably, the decrees imposed no restrictions on the pricing of Equilon gasoline.

After the joint venture began to operate, respondents brought suit in District Court, alleging that, by unifying gasoline prices under the two brands, petitioners had violated the per se rule against price...

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260 practice notes
  • Chamber of Commerce of the United States v. City of Seattle, No. 17-35640
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • May 11, 2018
    ...known as horizontal price-fixing agreements, fall into the category of arrangements that are per se unlawful." Texaco Inc. v. Dagher , 547 U.S. 1, 5, 126 S.Ct. 1276, 164 L.Ed.2d 1 (2006) ; see Knevelbaard Dairies v. Kraft Foods, Inc. , 232 F.3d 979, 986 (9th Cir. 2000) ("Foremost in the cat......
  • Solyndra Residual Trust v. Suntech Power Holdings Co., Case No: C 12–05272 SBA
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • March 31, 2014
    ...known as horizontal pricefixing agreements, fall into the category of arrangements that are per se unlawful.” Texaco, Inc. v. Dagher, 547 U.S. 1, 5, 126 S.Ct. 1276, 164 L.Ed.2d 1 (2006) ; see Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 986 (9th Cir. 2000) (“Foremost in the categ......
  • In re Blue Cross Blue Shield Antitrust Litig., No. 2:13–CV–20000–RDP.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Northern District of Alabama
    • June 18, 2014
    ...a particular contract or combination is in fact unreasonable and anticompetitive before it will be found unlawful.” Texaco Inc. v. Dagher, 547 U.S. 1, 5, 126 S.Ct. 1276, 164 L.Ed.2d 1 (2006). The Court has also expressed reluctance to classify agreements as per se illegal: “Per se liability......
  • In re ., No. 2:13–CV–20000–RDP.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Northern District of Alabama
    • June 18, 2014
    ...a particular contract or combination is in fact unreasonable and anticompetitive before it will be found unlawful.” Texaco Inc. v. Dagher, 547 U.S. 1, 5, 126 S.Ct. 1276, 164 L.Ed.2d 1 (2006). The Court has also expressed reluctance to classify agreements as per se illegal: “ Per se liabilit......
  • Request a trial to view additional results
236 cases
  • Chamber of Commerce of the United States v. City of Seattle, No. 17-35640
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • May 11, 2018
    ...known as horizontal price-fixing agreements, fall into the category of arrangements that are per se unlawful." Texaco Inc. v. Dagher , 547 U.S. 1, 5, 126 S.Ct. 1276, 164 L.Ed.2d 1 (2006) ; see Knevelbaard Dairies v. Kraft Foods, Inc. , 232 F.3d 979, 986 (9th Cir. 2000) ("Foremost in the cat......
  • Solyndra Residual Trust v. Suntech Power Holdings Co., Case No: C 12–05272 SBA
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • March 31, 2014
    ...known as horizontal pricefixing agreements, fall into the category of arrangements that are per se unlawful.” Texaco, Inc. v. Dagher, 547 U.S. 1, 5, 126 S.Ct. 1276, 164 L.Ed.2d 1 (2006) ; see Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 986 (9th Cir. 2000) (“Foremost in the categ......
  • In re Blue Cross Blue Shield Antitrust Litig., No. 2:13–CV–20000–RDP.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Northern District of Alabama
    • June 18, 2014
    ...a particular contract or combination is in fact unreasonable and anticompetitive before it will be found unlawful.” Texaco Inc. v. Dagher, 547 U.S. 1, 5, 126 S.Ct. 1276, 164 L.Ed.2d 1 (2006). The Court has also expressed reluctance to classify agreements as per se illegal: “Per se liability......
  • In re ., No. 2:13–CV–20000–RDP.
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Northern District of Alabama
    • June 18, 2014
    ...a particular contract or combination is in fact unreasonable and anticompetitive before it will be found unlawful.” Texaco Inc. v. Dagher, 547 U.S. 1, 5, 126 S.Ct. 1276, 164 L.Ed.2d 1 (2006). The Court has also expressed reluctance to classify agreements as per se illegal: “ Per se liabilit......
  • Request a trial to view additional results
3 firm's commentaries
13 books & journal articles
  • Partial Price-Fixing and Semi-Collusion
    • United States
    • Antitrust Bulletin Nbr. 66-4, December 2021
    • December 1, 2021
    ...in such cases. Part VI concludes.5. National Collegiate Athletic Association v. Alston, 549 U.S. __ (2021).6. Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006).7. Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877, 886–887 (2007).8. National Collegiate Athletic Association v. Alst......
  • ANTITRUST VIOLATIONS
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    • American Criminal Law Review Nbr. 58-3, July 2021
    • July 1, 2021
    ...and again that § 1 ‘outlaw[s] only unreasonable restraints.’” (quoting State Oil Co. v. Khan, 522 U.S. 3, 10 (1997))); Texaco v. Dagher, 547 U.S. 1, 5 (2006) (explaining that all agreements in restraint of trade would be unlawful under the literal language of the Sherman Act and concluding ......
  • Rights, Structure, and Remediation: The Collapse of Constitutional Remedies.
    • United States
    • Yale Law Journal Vol. 131 Nbr. 7, May 2022
    • May 1, 2022
    ...V. PIMENTEL 553 U.S. 851 No No STANTON V. SIMS 571 U.S. 3 No No FREEMAN V. QUICKEN LOANS, INC. 566 U.S. 624 No No TEXACO INC. V. DAGHER 547 U.S. 1 No No UPPER SKAGIT INDIAN TRIBE V. LUNDGREN 138 S. Ct. 1649 No No ARKANSAS CAME AND FISH COMMISSION V. UNITED STATES 568 U.S. 23 Yes Yes CEDAR P......
  • The Roberts Court and Supreme Court's New Antitrust Law for the Global Knowledge and Entrepreneurial Economy in a “Perfect Storm” of Danger—And Opportunity
    • United States
    • Antitrust Bulletin Nbr. 54-1, March 2009
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    ...Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977).10 Illi. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (2006).11 Texaco Inc. v. Dagher, 547 U.S. 1 (2006).12 Mark Whitener, The End of Antitrust as We Know It?, ANITTRUST, Fall2007, at 5.13 Leegin Creative Leather Prods., Inc. v. PSKS, Inc.,......
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