Echoes of Suez

When the Justice Department's trustbusters got an indictment against 29 major U.S. oil companies in 1958, charging a criminal conspiracy to boost oil prices after the Suez crisis, predictions were free that the trial would last six months or more. But last week, in Tulsa, Okla., after a trial of barely ten days, Federal Judge Royce H. Savage acquitted the companies. Said Judge Savage: "I have an absolute conviction that the defendants are not guilty."

The heart of Justice's complaint was that Standard Oil Co. (New Jersey) and its affiliated companies had combined to boost prices shortly after Suez. Humble Oil & Refining Co., 88% owned by Jersey Standard, started the ball rolling, and most of the industry had quickly fallen into line.

Duck Hunt. Ordinarily, such an industry-wide case would have dragged on interminably. Judge Savage would have none of it. Using a civil-suit procedure, he held pre-trial meetings to settle on the major points at issue. Defense attorneys, for example, disagreed on what percentage of the market their clients held. Judge Savage noted that a percentage point either way would make little difference. "We agreed on 65%," said one defense attorney, "and went on to the next item."

At the trial, the Government took only seven days to present its case, arguing that it was illegal for a parent company to consult with subsidiaries on prices. Government lawyers contended that Hines Baker, then president of Humble Oil, talked with Standard of Jersey President Monroe J. Rathbone about a price hike in Louisiana in December 1956, that Rathbone reported the matter to Jersey's executive committee, and that an industrywide boost started soon after. The Government questioned Lion Oil Co. Vice President John E. Howell about a series of phone conversations with top oil-industry executives. Howell explained that the calls were about a duck hunt in Arkansas--not crude-oil prices. The Government also introduced a wire from Continental Oil Executive Vice President Charles A. Perlitz to Conoco President Leonard F. McCollum in which he wrote, after much talk about crude oil: "Have not heard from Proctor as yet." Mr. Proctor, indicated the Government darkly, was executive vice president of Gulf Oil Corp., another of the defendants. Conoco's answer: the reference to Gulf's Proctor was about financing for the Trans-Canada pipeline, in which affiliates of Conoco and Gulf each had a 17% interest.

Rights of Parents. When it came time for the defense, the oilmen did not even bother to present a formal defense. Said Jersey Standard Lawyer Hugh Cox: Humble and Jersey had indeed discussed prices. "But where's the price fixing in that? Jersey Standard is a holding company--it has no prices. No court has held that parents can't discuss and agree on prices. A decision that this was in violation of the law would affect hundreds and perhaps thousands of firms. A drastic reorganization of the structure of business would result." The lawyers for the 29 oil companies moved for acquittal. Judge Savage upheld them. Said Socony Mobil Chairman Fred W. Bartlett: "The acquittal's coming without necessity of presenting our defense simply proves what we have said all along--that the case against us proved to be no case at all."

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