Memorandum of Wilbur L. Fugate to Robert A. Bicks, Justice Department, on the Consent Decrees in the International Oil Cartel Case, November 17, 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. 181-82.

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

On November 14, 1960 I appeared before Judge Cashin to present the two consent judgments against Jersey and Gulf. After I had reviewed the judgments in some detail, Mr. Dean for Jersey, and Mr. Howrey for Gulf, pointed out other aspects of the respective judgments. All of the other defendants were represented by counsel but none of them made any more than perfunctory comments with respect to the judgments.
Judge Cashin thanked counsel for the Government and the two defendants for working out the settlement and strongly urged the other defendants to also come to an agreement. The actual transcript of the Court's remarks from the Bench and on the record is as follows:

. . . Let me say to both Standard and Gulf and the government, the Court is appreciative of your efforts in culminating, so far as you two are concerned, this particular case. It has been a long, hard and arduous situation for everybody concerned, and I could get nowhere with the case without the cooperation of the respective attorneys for both Gulf and Standard. I want you to know I appreciate it very much. By that I do not mean I haven't had the cooperation of the attorneys as to the other defendants. My only hope is they will see the light and come wading in with or without bathing suits and we will close it out as to the remaining defendants. That is my wish and my prayer.

Taking the above in connection with past remarks of Judge Cashin indicating his desire for settlement, and his action in restricting the discovery to marketing items, I think we could characterize the Court's statement as indicating his wholehearted approval of the settlement.

Following the hearing, Judge Cashin, off the record, commented on the critical situation existing in the Middle East and in foreign countries generally, and stated again to counsel for the other defendants that he thought that from the point of view of national defense and preserving American interests abroad, it was very important that the case be settled as to the other defendants. Their counsel stated that they would consider the Court's comments very carefully.

On Tuesday, November 15th, Mr. Flurry and Mr. McHugh, both of the Senate Antitrust Subcommittee, called me and asked for copies of the two judgments. Mr. Kilgore informs me that Mr. Singman, counsel for the Celler Committee, also requested copies of the judgments. Mr. McHugh was critical of two aspects of the judgments, (1) the manner of breaking up StanVac, and (2) our failure to take further action against Aramco. As to the first point, I indicated that the companies had both represented to us that this was the only feasible way of separating the assets of StanVac and, moreover, that in all other foreign cases of disvestiture, the Court, even in litigated cases, had given an option for one of joint partners to purchase the entire assets or business in a country. This was true in the Minnesota Mining case, for example. I also emphasized to Mr. McHugh the provision of the judgment requiring Jersey affirmatively to use reasonable efforts to compete with Socony in the area formerly served by StanVac.

As to the second point I did not, of course, go into the national defense aspects of this question, but, in turn asked what measures Mr. McHugh thought should have been taken as to Aramco. He took the position that perhaps Aramco should have been forced to sell to all corners at the same price at which Aramco sells to the partners. I pointed out that this seemed unrealistic since the partners could sell to themselves at cost if they wished, and in fact in IPC, the price to the partners is cost plus a shilling. In fact, the joint company could merely deliver the prorated share of the oil to each partner. And, were there such a judgment provision, it would be a very simple thing for the partners to render it meaningless by fixing the price at such a high rate that outsiders could not purchase. Such a procedure would not injure the partners, since this is not an arms-length bargaining transaction and is in essence merely a delivery of the oil to the partners by the joint venture.

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