Royal Dutch Shell participation in price fixing cartels

“Shell’s fine was increased by 50 percent because of its involvement in previous cartels and another 50 percent for instigating and leading the cartel.”

SHELL’S CARTEL TRACK RECORD

Anyone familiar with the history of Royal Dutch-Shell knows that the success of the oil giant was founded from the outset on a platform of price fixing. Below is some of the evidence from 1977 onwards. We will later this year publish evidence of its unscrupulous activities in this regard stretching back to its foundation.

An article published by The New York Times in September 1977 reported that legal proceedings had been brought against General Atomic Company and its joints owners, the Gulf Oil corporation and Scallop Nuclear Inc., part of the Royal Dutch Shell Group. The complex case involved allegations of price fixing of uranium as part of a secret cartel. According to a related article in Time Magazine, it was “one of the largest and most complex corporate lawsuits ever filed in an American court-a $2 billion-plus action by a New Mexico uranium mining company, United Nuclear Corp., against General Atomic Co., a 50%-owned subsidiary of Gulf Oil Corp., for fraud, coercion and breaches of the nation’s antitrust laws.” A New York Times article published on 2 January 1978, said: “Gulf and a subsidiary of the Royal Dutch-Shell Group are equal partners in General Atomic” and that Gulf conceded that its subsidiary had been involved in a uranium cartel. Time magazine reported in June 1978: “Gulf is also enmeshed in a web of lawsuits growing out of allegations that it secretly participated in a worldwide cartel to manipulate supplies and raise the price of uranium. Last week the company pleaded no contest in the U.S. Government’s case growing out of the cartel arrangement…”. A New York Times article in September 1980 reported that a New Mexico state court had rendered a default judgment against General Atomic on the grounds that it had refused to supply certain information during the discovery process. In May 1981, a New York Times article reported a settlement of the “international uranium cartel” case.

In January 1987, the U.S. Energy Department announced that Shell Oil Company had agreed to pay the sum of $180 million as a settlement of allegations that it had violated oil-pricing and allocation controls. According to a New York Times article published on 3 January 1987, Shell Oil Company maintained that the settlement sum was neither a fine nor a penalty and had been agreed to avoid prolonged litigation and remove uncertainties.

In August 1991, State of California officials announced that Chevron, Mobil, Shell and Texaco had agreed to settle for the sum of $45 million each, a long-running price-fixing case. According to a New York Times article reporting the settlement, the case dated back to 1975 “when the state and the City of Long Beach filed a suit accusing the companies of artificially depressing the price they would pay for oil pumped from the Wilmington oilfield, an area of tidal lands in which the state and the city shared oil rights.” The oil companies all denied price-fixing charges and did not admit any liability.

In November 2003, the Coral Power unit of Royal Dutch Shell agreed to pay the sum of $7.79 million as a settlement of Federal allegations of electricity-market manipulation in the State of California in 2000. A New York Times article reporting the settlement, said that Coral, owned 90.4 percent by Royal Dutch Shell, had not admitted any wrongdoing.

In September 2006, the European Commission fined Shell $137m for their role in a cartel that fixed the price of bitumen. According to a report published in the Houston Chronicle, “the EU Commission said the company was an instigator, took the leadership in the cartel and was a repeat offender”. The report went on to state that “Shell’s fine was increased by 50 percent because of its involvement in previous cartels and another 50 percent for instigating and leading the cartel.” A BBC news report revealed that Shell has previously been fined by the EU Commission for price-fixing in other markets (PVC and propylene). An article in The Daily Mail stated that Shell’s fine was increased by lOpc for “obstructing the probe”. On 29 November 2006, it was reported that the European Commission was imposing “its second-largest cartel fine against Shell, Dow Chemical, ENI, Unipetrol and Trade-Stomil.” The fine was imposed for “fixing prices of synthetic rubber, used mainly in tyre production.” According to an article in The Times newspaper, “Shell’s fine, as well as ENI’s, was increased because it was a repeat offender.” All three of the featured quotations are from The Times article. According to a BBC News report, also published on 29 November 2006, Royal Dutch Shell Plc was fined 160.8 million euros.

In May 2008, Bloomberg.com reported that in a lawsuit filed at the High Court in London, units of Royal Dutch Shell Plc, Bayer AG and up to 20 other companies, were being sued over an alleged rubber cartel in Europe operating from about 1996 to 2002. The case is Cooper Tire & Rubber Co. v. Shell Chemicals U.K. Ltd., 07-1676. The article said that “Unipetrol and units of Shell, Dow Chemical Co., Eni SpA and Trade-Stomil Sp” had been fined a total of $813 million in a “2006 European Union antitrust case over material used to make tires and shoes.”

In July 2008, The Times reported that “Supermarkets and tobacco firm are fined £173m for price fixing”. UK supermarkets Asda and Somerfield had admitted fixing the price of cigarettes and overcharging customers under a secret deal with the manufacturer of named cigarette brands. Other accused firms, including Shell in respect of cigarette sales through its petrol station stores, decided to fight the allegations. If found guilty of collusion, they face serious penalties under the UK Competition Act.

On 1 October 2008, Reuters reported that The European Commission had fined nine petrochemical companies a total of 676 million euros, about $955 million USD, for forming a “paraffin mafia” to “fix prices and carve up markets for paraffin wax“. Royal Dutch Shell escaped a potential fine of 96 million euros because “it blew the whistle first to the EU competition authorities”. The cartel was known inside Shell as the “paraffin mafia”. The paraffin mafia story was also covered in The Times, The Guardian, The Financial Times and The Wall Street Journal.

On 26 November 2008, The Financial Post reported “GREECE FINES BP, SHELL $80M FOR PRICE-FIXING“. Greece’s state competition watchdog had fined BP and Royal Dutch Shell the equivalent of almost $80 million Cdn for price-fixing, alleging the two companies had a “concerted practice” of setting discount policy in Greek gas stations, which “amounted to price-fixing, the competition commission ruled”. The news was also covered in The International Herald Tribune.

On 4 December 2008, Bloomberg.com published an article reporting that “Exxon Mobil Corp., Royal Dutch Shell PLC, Chevron and Total SA were fined 41.1 million euros ($52 million) by the French antitrust authority for fixing the price of fuel for certain Air France-KLM Group flights.” Wendel Broere, a spokesman for Shell, which was fined 10.5 million euros, was quoted as saying” “Compliance with antitrust rules remains a top priority for management.” Shell had not decided whether to appeal.