Memorandum of Wilbur L. Fugate to W. Wallace Kirkpatrick, Department of Justice, on International Oil Cartel Case Consent Judgments, November 10, 1960.

From: Burton I. Kaufman, The Oil Cartel Case: A Documentary Study of Antitrust Activity in the Cold War Era (Westport, CT: Greenwood Press, 1978), pp. 179-80.

SOURCE: Department of Justice File, 60-57-140.

The following is the general outline of the statement which I propose to make to judge Cashin with respect to the Jersey and Gulf consent judgments which will be before him on next Monday, November 14th, at 10:00 A.M.:

1. State that the purpose of my appearance is to ask the Court to enter the two judgments previously presented to the Court for its consideration.

2. Advise the Court that although we do not consider that the other defendants are parties at interest within the meaning of the F.R.C.P., ample notice has been given to them and each defendant has had a copy of the judgment for a period of ten days.

3. Indicate that the judgments are the result of extended negotiations which were carried on for a number of months in 1957, were broken off
and were resumed again early this year.

4. State that the judgments have been cleared with other interested Government agencies and that there is no objection to the judgments from any Government agency.

5. Recite that a condition of the Government's consent to the judgments had been that the defendants comply with Pre-Trial Order No. 2, and that the documents produced, together with previously produced documents, have now been authenticated. (Judge Cashin has marked the two stipulations on authentication "So Ordered.")

6. Summarize the two judgments, taking them up section by section, but not repeating sections in the two judgments which are to the same effect.

7. Review Judge Cashin's efforts to persuade the parties to settle the case, noting our submission to him in 1958 of the drafts of two judgments at that time and the helpful discussion of the issues in pre-trial conferences, and including a statement of appreciation to Judge Cashin for giving the direction to the case which culminated in the settlement as to these defendants. Say that we hope these judgments will set the pattern for other judgments but that unless there are negotiations, we intend to press the case to trial as soon as possible.

8. Conclude with a statement that the Attorney General and the Assistant Attorney General in charge of the Antitrust Division have approved these judgments, and that we believe this pattern of relief, requiring independent activity on the part of the defendants and prohibiting price fixing agreements and joint marketing, will promote competitive conditions in the foreign commerce of the United States in petroleum and its products.

I do not intend to bring into my statement anything about national defense and security factors or relations with foreign nations, except to say, if asked, that these questions have been considered by the Department of State and that State does not believe that there will be any adverse foreign relations effects from the judgments. If questioned as to why joint production, refining and pipeline ventures abroad were expressly not included in the judgments, I could remind the Court that we have previously taken the position that the legality of such joint ventures abroad was not in issue in the case. Such ventures were mentioned in the complaint as having been used to implement the over-all conspiracy charged. The rationale followed is that the judgments do not prohibit defendants from jointly producing or refining the oil solely in a foreign nation but once a defendant has taken its share, it must sell it independently. This is also usually the point where the oil leaves the country of production and comes into the stream of international commerce. I could say, if pressed, that we did not consider that the case necessarily called for divestiture or separation of these joint interests, and moreover, that there were questions of jurisdiction and foreign law involved since these ventures are located solely within foreign nations.

[The national defense argument which I would not go into, is, in a nutshell, that separating these joint interests at this time might jeopardize the position of United States oil companies abroad vis-a-vis the Russians. Requiring independent action by each company in marketing and forbidding price agreements, on the other hand, will allow individual action to meet price competition by Soviet oil.]

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