Midwest US gas munis charge five majors with antitrust violations

Washington (Platts)--9Jun2004

Seventeen Midwest US municipal gas utilities Tuesday filed suit against five
of the world's largest oil companies, alleging that the majors have a monopoly
on wholesale natural gas and have deliberately withheld supplies in an effort
raise prices. 

The suit, filed with the US District Court for the District of Columbia,
charges ExxonMobil Corp, BP, Royal Dutch/Shell Group, ChevronTexaco
Corp and ConocoPhillips Corp with violating US antitrust laws. Thirteen Kansas
munis, two in Missouri and one each in Texas, Indiana and Illinois joined the
suit, saying the oil companies violated the Sherman Act by conspiring "in
restraint of trade and commerce" and acting "to monopolize and increase the
prices of wholesale of natural gas." The suit charges that the five companies,
which account for about 70% of US natural gas production, have reduced or
excluded supplies for a sustained period of time.

The munis also alleged that the oil companies had maintained discriminatory
price differentials between sales of natural gas to the municipal buyers and
large retail customers within the municipalities in an effort to reduce
competition. Moreover, the suit said the companies in 2003 conspired to revise
a National Petroleum Council report to conclude prices would rise unless
natural gas producers get subsidies. Because of these alleged actions, the
munis said, competition in wholesale pricing had been eliminated, the munis
had been denied profits from some of their largest retail customers and
municipalities had been denied the benefit of low-cost natural gas.

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