United States v. Socony-Vacuum Oil Co., Inc.Annotate this Case
310 U.S. 150 (1940)
U.S. Supreme Court
United States v. Socony-Vacuum Oil Co., Inc., 310 U.S. 150 (1940)
United States v. Socony-Vacuum Oil Co., Inc.
Argued February 5, 6, 1940
Decided May 6, 1940
310 U.S. 150
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
1. Agreements to fix prices in interstate commerce are unlawful per se under the Sherman Act, and no showing of so-called competitive abuses or evils which the agreements were designed to eliminate or alleviate may be interposed as a defense. Pp. 310 U. S. 210, 310 U. S. 218.
2. Numerous oil companies and individuals were convicted under an indictment alleging that, in violation of § 1 of the Sherman Act, they conspired to raise and maintain spot market prices of gasoline, and prices to jobbers and consumers in the "Midwestern Area," embracing many States, by buying up "distress" gasoline on the spot markets and eliminating it as a market factor. In support of allegations of the indictment, there was evidence to prove that the defendants, with intent to raise and maintain prices, devised and carried out an organized program of regularly ascertaining the amounts of surplus spot market gasoline, of assigning its sellers to buyers who were in the combination, and of purchasing it at fair going market prices, and that this process, by removing part of the spot market supply, was at least a contributing factor in stabilizing the spot market and thereby causing an increase of prices, so that jobbers and consumers in the midwestern area paid more for their gasoline than they would have paid but for the conspiracy, their prices being geared to spot market prices.
(1) It is immaterial to the question of guilt that other factors also may have contributed to the rise and stability of the markets, and that competition on the spot markets was not entirely eliminated. P. 310 U. S. 219.
(2) The elimination of so-called competitive evils is no legal justification for such buying programs. So far as price-fixing agreements are concerned, the Act establishes one uniform rule applicable to all industries alike. P. 310 U. S. 220.
(3) Even though the members of the price-fixing group were in no position to control the market, yet, to the extent that they raised, lowered, fixed, pegged, or stabilized prices, they would be directly interfering with the free play of market forces. P. 310 U. S. 221.
(4) There was no error in the refusal to charge that, in order to convict, the jury must find that the resultant prices were raised and maintained at "high, arbitrary and noncompetitive levels." A charge in the indictment to that effect was surplusage. P. 310 U. S. 222.
(5) Nor is it important that the prices paid by the combination were not fixed in the sense of being uniform and inflexible. P. 310 U. S. 222.
(6) A combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign commerce is illegal per se under the Act. P. 310 U. S. 223.
(7) Where the means for price-fixing are purchases of a part of the supply of the commodity for the purpose of keeping it from having a depressive effect on the market, power to fix prices may be found to exist though the combination does not control a substantial part of the commodity. P. 310 U. S. 224.
(8) Price-fixing agreements may have effective influence over the market, and utility to members of the conspiracy group, though the power possessed or exerted by the combination falls far short of domination and control. The Sherman Act is not concerned solely with monopoly power. P. 310 U. S. 224.
(9) Proof that a combination was formed for the purpose of fixing prices, and that it caused them to be fixed or contributed to that result, is proof of the completion of a price-fixing conspiracy under § 1 of the Act. P. 310 U. S. 224.
(10) A conspiracy to fix prices violates § 1 of the Act though no overt act is shown, though it is not established that the conspirators had the means available for accomplishment of their objective, and though the conspiracy embraced but a part of the interstate or foreign commerce in the commodity. P. 310 U. S. 225n.
(11) Under the National Industrial Recovery Act, 48 Stat. 195, a price-fixing agreement could be exempted from the provisions of the Sherman Act only through the code machinery with the approval of the President as provided in §§ 3(a) and 5; mere knowledge, acquiescence or tacit approval by government employees would not suffice. Pp. 310 U. S. 225-227.
(12) A practice contrary to the Sherman Act, even if approved under the National Industrial Recovery Act, became unlawful when continued after the expiration of the Recovery Act. P. 310 U. S. 227.
(13) The fact that the buying program in this case may have been consistent with the general objectives of the National Industrial Recovery Act is irrelevant to its legality under the Sherman Act where the method provided by Congress for alleviating the penalties of the Sherman Act was not followed. P. 310 U. S. 227.
(14) Offers of proof by defendants to show that, by their buying program, they had not raised spot market prices of gasoline to an artificial, noncompetitive level held properly denied as immaterial. P. 310 U. S. 229.
(15) Offers of proof by defendants to establish and evaluate other contributing causes for price rise and market stability during the indictment period held properly denied as cumulative and collateral. A trial court has a wide range of discretion in the exclusion of such evidence. P. 310 U. S. 229.
3. In a trial under the Sherman Act, where much evidence had been given of general economic conditions before and during the indictment period, the defense offered further evidence of market conditions antedating that period, introduction of which would have complicated the case, confused the jury possibly, and protracted an already lengthy trial, held that refusal of the offers was not ground for a new trial, matters of substance not being affected. P. 310 U. S. 229.
4. Use of grand jury testimony for the purpose of refreshing the recollection of a witness rests in the sound discretion of the trial judge, and no iron-clad rule requires that opposing counsel be shown the grand jury transcript where it is not shown the witness and where some appropriate procedure is adopted to prevent its improper use. Pp. 310 U. S. 231, 310 U. S. 233.
5. Grand jury testimony is ordinarily confidential. But, after the grand jury's functions are ended, disclosure is wholly proper where the ends of justice require it. Pp. 310 U. S. 233-234.
6. Permission to use grand jury testimony to refresh the memories of witnesses in a criminal case is not ground for a new trial, even if erroneous, where it was clearly not prejudicial, and did not affect substantial rights of the defendant. Jud.Code, § 269. P. 310 U. S. 235.
7. In the absence of exceptional circumstances, improper remarks made by a prosecuting attorney in his argument to the jury in a criminal trial are not ground for a new trial if they were not objected to at the time. Pp. 310 U. S. 237, 310 U. S. 238-239.
8. It is not improper in a Sherman Act case to discuss corporate power, its use and abuse, relevantly to the issues, for the subject is material to the philosophy of that Act and its purposes and objectives are clearly legitimate subjects for discussion before the jury. P. 310 U. S. 239.
9. Appeals to class prejudice in argument to a jury are highly improper and cannot be condoned, and trial courts should ever be alert to prevent them. P. 310 U. S. 239.
10. Although some of the remarks made to the jury by government counsel in argument of this case appealed to class prejudice, were undignified and intemperate, and did not comport with the standards of propriety expected of a prosecutor, they are, in the particular circumstances, not regarded as prejudicial, but as minor aberrations in a prolonged trial of a strong case which could not have influenced the minds of jurors. P. 310 U. S. 239.
11. Statements made in argument to the jury by government counsel in a prosecution under the Sherman Act to the effect that it was the wish and desire of the highest officials in the Government to have the defendants convicted held not ground for a new trial, because the defendants had sought to justify their activities as done with government approval and because the statements were but casual episodes in a long summation, and not at all reflective of the quality of the argument as a whole. Pp. 310 U. S. 241-242.
12. Assertions of personal knowledge, made in argument to the jury by government counsel, held not prejudicial where they related to a matter irrelevant to the case and, upon objection, were withdrawn, and the jury instructed to disregard them. P. 310 U. S. 242.
13. The granting of a new trial to some of the defendants convicted of a conspiracy does not require that a new trial be granted to the others, where participation by the former was not necessary to the existence of the crime charged and the jury was instructed that it could convict any of the defendants found to have been members of the combination, and that it need not convict all or none. Pp. 310 U. S. 243, 310 U. S. 246.
14. In a Sherman Act case, as in other conspiracy cases, the grant of a new trial to some defendants and its denial to others is not per se reversible error. After the jury's verdict has been set aside as respects some of the alleged coconspirators, those remaining cannot seize on that action as ground for the granting of a new trial to them unless they can establish that such action was so clearly prejudicial to them that the denial of their motions constituted a plain abuse of discretion. P. 310 U. S. 247.
15. As a general rule, neither this Court nor the Circuit Court of Appeals will review the action of a federal trial court in granting or denying a motion for a new trial for error of fact, since such action is a matter within the discretion of the trial court. P. 310 U. S. 247.
16. A denial of a motion for new trial on the ground that the verdict was against the weight of the evidence is not subject to review. P. 310 U. S. 248.
17. Where an indictment charges various means by which a conspiracy is to be effectuated, not all of them need be proved. P. 310 U. S. 249.
18. Where a price-fixing conspiracy, violating the Sherman Act, embraced, at least by clear implication, the making of sales at advanced prices to jobbers and consumers in a wide area, held that prosecution would lie in a judicial district within that area and within which such sales were made by any of the conspirators, though the conspiracy was formed elsewhere. P. 310 U. S. 250.
19. Conspiracies under the Act are not dependent on the doing of any act other than the act of conspiring, as a condition of liability. P. 310 U. S. 252.
105 F.2d 809 reversed.
Certiorari, 308 U.S. 540, on cross-petitions, to review the rulings of the court below in a case involving the indictment and conviction of corporations and individuals for a conspiracy in violation of § 1 of the Sherman Anti-Trust Act. The opinion of the District Court is reported in 23 F.Supp. 937.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
The Circuit Court of Appeals reversed and remanded for a new trial. 105 F.2d 809. The case is here on a petition and cross-petition for certiorari, both of which we granted because of the public importance of the issues raised. 308 U.S. 540.
I. The Indictment.
The indictment was returned in December, 1936, in the United States District Court for the Western District of Wisconsin. It charges that certain major oil companies, [Footnote 4] selling gasoline in the Mid-Western area [Footnote 5] (which includes the Western District of Wisconsin), (1) "combined and conspired together for the purpose of artificially raising and fixing the tank car prices of gasoline" in the "spot markets" in the East Texas [Footnote 6] and Mid-Continent [Footnote 7] fields; (2) "have artificially raised and fixed said spot market tank car prices of gasoline and have maintained said prices at artificially high and noncompetitive levels, and at levels agreed upon among them and have thereby intentionally increased and fixed the tank car prices of gasoline contracted to be sold and sold in interstate commerce as aforesaid in the Mid-Western area;" (3) "have arbitrarily," by reason of the provisions of the prevailing form of jobber contracts which made the price to the jobber dependent on the average spot market price, "exacted large sums of money from thousands of jobbers with
whom they have had such contracts in said Mid-Western area;" and (4) "in turn have intentionally raised the general level of retail prices prevailing in said Mid-Western area."
The manner and means of effectuating such conspiracy are alleged in substance as follows: defendants, from February, 1935, to December, 1936, "have knowingly and unlawfully engaged and participated in two concerted gasoline buying programs" for the purchase
"from independent refiners in spot transactions of large quantities of gasoline in the East Texas and Mid-Continent fields at uniform, high, and at times progressively increased prices."
The East Texas buying program is alleged to have embraced purchases of gasoline in spot transactions from most of the independent refiners in the East Texas field, who were members of the East Texas Refiners' Marketing Association, formed in February, 1935, with the knowledge and approval of some of the defendants "for the purpose of selling and facilitating the sale of gasoline to defendant major oil companies." It is alleged that arrangements were made and carried out for allotting orders for gasoline received from defendants among the members of that association, and that such purchases amounted to more than 50% of all gasoline produced by those independent refiners. The Mid-Continent buying program is alleged to have included "large and increased purchases of gasoline" by defendants from independent refiners located in the Mid-Continent fields pursuant to allotments among themselves. Those purchases, it is charged, were made from independent refiners who were assigned to certain of the defendants at monthly meetings of a group representing defendants. It is alleged that the purchases in this buying program amounted to nearly 50% of all gasoline sold by those independents. As respects both the East Texas and the Mid-Continent buying programs, it is alleged that the purchases of gasoline were in excess of the amounts which defendants would have
purchased but for those programs; that, at the instance of certain defendants, these independent refiners curtailed their production of gasoline.
The independent refiners selling in these programs were named as coconspirators, but not as defendants.
Certain market journals -- Chicago Journal of Commerce, Platt's Oilgram, National Petroleum News -- were made defendants. [Footnote 8] Their participation in the conspiracy is alleged as follows: that they have been "the chief agencies and instrumentalities" through which the wrongfully raised prices "have affected the prices paid by jobbers, retail dealers, and consumers for gasoline in the Mid-Western area," that they "knowingly published and circulated as such price quotations the wrongfully and artificially raised and fixed prices for gasoline paid by" defendants in these buying programs, while "representing the price quotations published by them" to be gasoline prices "prevailing in spot sales to jobbers in tank car lots" and while "knowing and intending them to be relied on as such by jobbers and to be made the basis of prices to jobbers."
Jurisdiction and venue in the Western District of Wisconsin are alleged as follows: that most of defendant major oil companies have sold large quantities of gasoline in tank car lots to jobbers in that district at the "artificially raised and fixed and noncompetitive prices;" that they have "solicited and taken contracts and orders" for
gasoline in that district, and that they have required retail dealers and consumers therein "to pay artificially increased prices for gasoline" pursuant to the conspiracy.
The methods of marketing and selling gasoline in the Mid-Western area are set forth in the indictment in some detail. Since we hereafter develop the facts concerning them, it will suffice at this point to summarize them briefly. Each defendant major oil company owns, operates, or leases retail service stations in this area. It supplies those stations, as well as independent retail stations, with gasoline from its bulk storage plants. All but one sell large quantities of gasoline to jobbers in tank car lots under term contracts. In this area, these jobbers exceed 4,000 in number, and distribute about 50% of all gasoline distributed to retail service stations therein, the bulk of the jobbers' purchases being made from the defendant companies. The price to the jobbers under those contracts with defendant companies is made dependent on the spot market price, pursuant to a formula hereinafter discussed. And the spot market tank car prices of gasoline directly and substantially influence the retail prices in the area. In sum, it is alleged that defendants, by raising and fixing the tank car prices of gasoline in these spot markets, could and did increase the tank car prices and the retail prices of gasoline sold in the Mid-Western area. The vulnerability of these spot markets to that type of manipulation or stabilization is emphasized by the allegation that spot market prices published in the journals were the result of spot sales made chiefly by independent refiners of a relatively small amount of the gasoline sold in that area -- virtually all gasoline sold in tank car quantities in spot market transactions in the Mid-Western
area being sold by independent refiners, such sales amounting to less than 5% of all gasoline marketed therein.
So much for the indictment.
II. Background of the Alleged Conspiracy.
Evidence was introduced (or respondents made offers of proof) showing or tending to show the following conditions preceding the commencement of the alleged conspiracy in February, 1935. As we shall develop later, these facts were, in the main, relevant to certain defenses which respondents at the trial unsuccessfully sought to interpose to the indictment.
Beginning about 1926, there commenced a period of production of crude oil in such quantities as seriously to affect crude oil and gasoline markets throughout the United States. Overproduction was wasteful, reduced the productive capacity of the oil fields, and drove the price of oil down to levels below the cost of production from pumping and stripper [Footnote 9] wells. When the price falls below such cost, those wells must be abandoned. Once abandoned, subsurface changes make it difficult or impossible to bring those wells back into production. Since such wells constitute about 40% of the country's known oil reserves, conservation requires that the price of crude oil be maintained at a level which will permit such wells to be operated. As Oklahoma and Kansas were attempting to remedy the situation through their proration laws, the largest oil field in history was discovered in East Texas. That was in 1930. The supply of oil from this
field was so great that, at one time, crude oil sank to 10 or 15 cents a barrel, and gasoline was sold in the East Texas field for 2 1/8
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