(Slip Opinion) OCTOBER TERM, 2005 1 

Syllabus 

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is 

being done in connection with this case, at the time the opinion is issued. 

The syllabus constitutes no part of the opinion of the Court but has been 

prepared by the Reporter of Decisions for the convenience of the reader. 

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. 

SUPREME COURT OF THE UNITED STATES 

Syllabus 

TEXACO INC. v. DAGHER ET AL. 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR 

THE NINTH CIRCUIT 

No. 04–805. Argued January 10, 2006—Decided February 28, 2006* 

Petitioners, Texaco Inc. and Shell Oil Co., collaborated in a joint venture, Equilon Enterprises, to refine and sell gasoline in the western 

United States under the two companies’ original brand names. After 

Equilon set a single price for both brands, respondents, Texaco and 

Shell Oil service station owners, brought suit alleging that, by unifying gas prices under the two brands, petitioners had violated the per 

se rule against price fixing long recognized under §1 of the Sherman 

Act, see, e.g., Catalano, Inc. v. Target Sales, Inc., 446 U. S. 643, 647. 

Granting petitioners summary judgment, the District Court determined that the rule of reason, rather than a per se rule, governs respondents’ claim, and that, by eschewing rule of reason analysis, respondents had failed to raise a triable issue of fact. The Ninth 

Circuit reversed, characterizing petitioners’ position as a request for 

an exception to the per se price-fixing prohibition, and rejecting that 

request. 

Held: It is not per se illegal under §1 of the Sherman Act for a lawful,

economically integrated joint venture to set the prices at which it 

sells its products. Although §1 prohibits “[e]very contract [or] combination . . . in restraint of trade,” 15 U. S. C. §1, this Court has not 

taken a literal approach to that language, recognizing, instead, that 

Congress intended to outlaw only unreasonable restraints, e.g., State 

Oil Co. v. Khan, 522 U. S. 3, 10. Under rule of reason analysis, antitrust plaintiffs must demonstrate that a particular contract or combination is in fact unreasonable and anticompetitive. See, e.g., id., at 

10–19. Per se liability is reserved for “plainly anticompetitive” agree-

—————— 

* Together with No. 04–814, Shell Oil Co. v. Dagher et al., also on certiorari to the same court. 
2 TEXACO INC. v. DAGHER 

Syllabus 

ments. National Soc. of Professional Engineers v. United States, 435 

U. S. 679, 692. While “horizontal” price-fixing agreements between 

two or more competitors are per se unlawful, see, e.g., Catalano, supra, at 647, this case does not present such an agreement, because 

Texaco and Shell Oil did not compete with one another in the relevant market—i.e., gasoline sales to western service stations—but instead participated in that market jointly through Equilon. When 

those who would otherwise be competitors pool their capital and 

share the risks of loss and opportunities for profit, they are regarded 

as a single firm competing with other sellers in the market. Arizona 

v. Maricopa County Medical Soc., 457 U. S. 332, 356. As such, 

Equilon’s pricing policy may be price fixing in a literal sense, but it is 

not price fixing in the antitrust sense. The court below erred in 

reaching the opposite conclusion under the ancillary restraints doctrine, which governs the validity of restrictions imposed by a legitimate joint venture on nonventure activities. That doctrine has no 

application here, where the challenged business practice involves the 

core activity of the joint venture itself—the pricing of the very goods 

produced and sold by Equilon. Pp. 3–6. 

369 F. 3d 1108, reversed. 

THOMAS, J., delivered the opinion of the Court, in which all other 

Members joined, except ALITO, J., who took no part in the consideration 

or decision of the cases. 
_________________ 

_________________ 

Cite as: 547 U. S. ____ (2006) 1 

Opinion of the Court 

NOTICE: This opinion is subject to formal revision before publication in the 

preliminary print of the United States Reports. Readers are requested to 

notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order 

that corrections may be made before the preliminary print goes to press. 

SUPREME COURT OF THE UNITED STATES 

Nos. 04–805 and 04–814 

TEXACO INC., PETITIONER 

04–805 v. 

FOUAD N. DAGHER ET AL. 

SHELL OIL COMPANY, PETITIONER 

04–814 v. 

FOUAD N. DAGHER ET AL. 

ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF 

APPEALS FOR THE NINTH CIRCUIT 

[February 28, 2006] 

JUSTICE THOMAS delivered the opinion of the Court. 

From 1998 until 2002, petitioners Texaco Inc. and Shell

Oil Co. collaborated in a joint venture, Equilon Enterprises, to refine and sell gasoline in the western United 

States under the original Texaco and Shell Oil brand 

names. Respondents, a class of Texaco and Shell Oil 

service station owners, allege that petitioners engaged in 

unlawful price fixing when Equilon set a single price for 

both Texaco and Shell Oil brand gasoline. We granted 

certiorari to determine whether it is per se illegal under §1

of the Sherman Act, 15 U. S. C. §1, for a lawful, economically integrated joint venture to set the prices at which the 

joint venture sells its products. We conclude that it is not, 

and accordingly we reverse the contrary judgment of the 

Court of Appeals. 
2 TEXACO INC. v. DAGHER 

Opinion of the Court 

I 

Historically, Texaco and Shell Oil have competed with

one another in the national and international oil and 

gasoline markets. Their business activities include refining crude oil into gasoline, as well as marketing gasoline 

to downstream purchasers, such as the service stations 

represented in respondents’ class action.

In 1998, Texaco and Shell Oil formed a joint venture, 

Equilon, to consolidate their operations in the western 

United States, thereby ending competition between the 

two companies in the domestic refining and marketing of 

gasoline. Under the joint venture agreement, Texaco and 

Shell Oil agreed to pool their resources and share the risks

of and profits from Equilon’s activities. Equilon’s board of

directors would comprise representatives of Texaco and 

Shell Oil, and Equilon gasoline would be sold to downstream purchasers under the original Texaco and Shell Oil

brand names. The formation of Equilon was approved by 

consent decree, subject to certain divestments and other 

modifications, by the Federal Trade Commission, see In re 

Shell Oil Co., 125 F. T. C. 769 (1998), as well as by the 

state attorneys general of California, Hawaii, Oregon, and 

Washington. Notably, the decrees imposed no restrictions 

on the pricing of Equilon gasoline.

After the joint venture began to operate, respondents

brought suit in district court, alleging that, by unifying 

gasoline prices under the two brands, petitioners had 

violated the per se rule against price fixing that this Court 

has long recognized under §1 of the Sherman Act, ch. 647, 

26 Stat. 209, as amended, 15 U. S. C. §1. See, e.g., 

Catalano, Inc. v. Target Sales, Inc., 446 U. S. 643, 647 

(1980) (per curiam). The District Court awarded summary 

judgment to Texaco and Shell Oil. It determined that the 

rule of reason, rather than a per se rule or the quick look 

doctrine, governs respondents’ claim, and that, by eschewing rule of reason analysis, respondents had failed to raise 
Cite as: 547 U. S. ____ (2006) 3 

Opinion of the Court 

a triable issue of fact. The Ninth Circuit reversed, characterizing petitioners’ position as a request for an “exception 

to the per se prohibition on price fixing,” and rejecting that 

request. Dagher v. Saudi Refining, Inc., 369 F. 3d 1108, 

1116 (2004). We consolidated Texaco’s and Shell Oil’s 

separate petitions and granted certiorari to determine the 

extent to which the per se rule against price fixing applies 

to an important and increasingly popular form of business 

organization, the joint venture. 545 U. S. ___ (2005). 

II 

Section 1 of the Sherman Act prohibits “[e]very contract, 

combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several 

States.” 15 U. S. C. §1. This Court has not taken a literal 

approach to this language, however. See, e.g., State Oil 

Co. v. Khan, 522 U. S. 3, 10 (1997) (“[T]his Court has long 

recognized that Congress intended to outlaw only unreasonable restraints” (emphasis added)). Instead, this Court 

presumptively applies rule of reason analysis, under 

which antitrust plaintiffs must demonstrate that a particular contract or combination is in fact unreasonable and 

anticompetitive before it will be found unlawful. See, e.g., 

id., at 10–19 (concluding that vertical price-fixing arrangements are subject to the rule of reason, not per se

liability). Per se liability is reserved for only those agreements that are “so plainly anticompetitive that no elaborate study of the industry is needed to establish their 

illegality.” National Soc. of Professional Engineers v. 

United States, 435 U. S. 679, 692 (1978). Accordingly, “we 

have expressed reluctance to adopt per se rules . . . ‘where 

the economic impact of certain practices is not immediately obvious.’ ” State Oil, supra, at 10 (quoting FTC v. 

Indiana Federation of Dentists, 476 U. S. 447, 458–459 

(1986)). 

Price-fixing agreements between two or more competi-
4 TEXACO INC. v. DAGHER 

Opinion of the Court 

tors, otherwise known as horizontal price-fixing agreements, fall into the category of arrangements that are per 

se unlawful. See, e.g., Catalano, supra, at 647. These 

cases do not present such an agreement, however, because

Texaco and Shell Oil did not compete with one another in 

the relevant market—namely, the sale of gasoline to service stations in the western United States—but instead 

participated in that market jointly through their investments in Equilon.1 In other words, the pricing policy 

challenged here amounts to little more than price setting 

by a single entity—albeit within the context of a joint 

venture—and not a pricing agreement between competing 

entities with respect to their competing products. 

Throughout Equilon’s existence, Texaco and Shell Oil

shared in the profits of Equilon’s activities in their role as

investors, not competitors. When “persons who would 

otherwise be competitors pool their capital and share the 

risks of loss as well as the opportunities for profit . . . such 

joint ventures [are] regarded as a single firm competing 

with other sellers in the market.” Arizona v. Maricopa 

County Medical Soc., 457 U. S. 332, 356 (1982). As such, 

though Equilon’s pricing policy may be price fixing in a 

literal sense, it is not price fixing in the antitrust sense. 

See Broadcast Music, Inc. v. Columbia Broadcasting Sys-

—————— 

1We presume for purposes of these cases that Equilon is a lawful 

joint venture. Its formation has been approved by federal and state 

regulators, and there is no contention here that it is a sham. As the 

court below noted: “There is a voluminous record documenting the 

economic justifications for creating the joint ventures. [T]he defendants 

concluded that numerous synergies and cost efficiencies would result” 

by creating Equilon as well as a parallel venture, Motiva Enterprises, 

in the eastern United States, and “that nationwide there would be up to 

$800 million in cost savings annually.” 369 F. 3d 1108, 1111 (CA9 

2004). Had respondents challenged Equilon itself, they would have 

been required to show that its creation was anticompetitive under the 

rule of reason. See Copperweld Corp. v. Independence Tube Corp., 467 

U. S. 752, 768 (1984). 
Cite as: 547 U. S. ____ (2006) 5 

Opinion of the Court 

tem, Inc., 441 U. S. 1, 9 (1979) (“When two partners set the 

price of their goods or services they are literally ‘price 

fixing,’ but they are not per se in violation of the Sherman 

Act”).

This conclusion is confirmed by respondents’ apparent 

concession that there would be no per se liability had

Equilon simply chosen to sell its gasoline under a single 

brand. See Tr. of Oral Arg. 34. We see no reason to treat 

Equilon differently just because it chose to sell gasoline 

under two distinct brands at a single price. As a single 

entity, a joint venture, like any other firm, must have the 

discretion to determine the prices of the products that it 

sells, including the discretion to sell a product under two 

different brands at a single, unified price. If Equilon’s

price unification policy is anticompetitive, then respondents should have challenged it pursuant to the rule of 

reason.2 But it would be inconsistent with this Court’s 

antitrust precedents to condemn the internal pricing 

decisions of a legitimate joint venture as per se unlawful.3 

The court below reached the opposite conclusion by 

invoking the ancillary restraints doctrine. 369 F. 3d, at 

1118–1124. That doctrine governs the validity of restrictions imposed by a legitimate business collaboration, such 

as a business association or joint venture, on nonventure 

activities. See, e.g., National Collegiate Athletic Assn. v. 

Board of Regents of Univ. of Okla., 468 U. S. 85, 113–115 

—————— 

2Respondents have not put forth a rule of reason claim. 369 F. 3d, at 

1113. Accordingly, we need not address petitioners’ alternative argument that §1 of the Sherman Act is inapplicable to joint ventures. 3Respondents alternatively contend that petitioners should be held 

liable under the quick look doctrine. To be sure, we have applied the 

quick look doctrine to business activities that are so plainly anticompetitive that courts need undertake only a cursory examination before 

imposing antitrust liability. See California Dental Assn. v. FTC, 526 

U. S. 756, 770 (1999). But for the same reasons that per se liability is 

unwarranted here, we conclude that petitioners cannot be held liable 

under the quick look doctrine. 
6 TEXACO INC. v. DAGHER 

Opinion of the Court 

(1984); Citizen Publishing Co. v. United States, 394 U. S. 

131, 135–136 (1969). Under the doctrine, courts must 

determine whether the nonventure restriction is a naked 

restraint on trade, and thus invalid, or one that is ancillary to the legitimate and competitive purposes of the 

business association, and thus valid. We agree with petitioners that the ancillary restraints doctrine has no application here, where the business practice being challenged 

involves the core activity of the joint venture itself—

namely, the pricing of the very goods produced and sold by 

Equilon. And even if we were to invoke the doctrine in 

these cases, Equilon’s pricing policy is clearly ancillary to 

the sale of its own products. Judge Fernandez, dissenting

from the ruling of the court below, put it well: 

“In this case, nothing more radical is afoot than the 

fact that an entity, which now owns all of the production, transportation, research, storage, sales and distribution facilities for engaging in the gasoline business, also prices its own products. It decided to price

them the same, as any other entity could. What could 

be more integral to the running of a business than 

setting a price for its goods and services?” 369 F. 3d, 

at 1127. 

See also Broadcast Music, supra, at 23 (“Joint ventures

and other cooperative arrangements are . . . not usually 

unlawful, at least not as price-fixing schemes, where the 

agreement on price is necessary to market the product at 

all”). 

* * * 

Because the pricing decisions of a legitimate joint venture do not fall within the narrow category of activity that 

is per se unlawful under §1 of the Sherman Act, respondents’ antitrust claim cannot prevail. Accordingly, the 

judgment of the Court of Appeals is reversed. 
Cite as: 547 U. S. ____ (2006) 7 

Opinion of the Court 

It is so ordered.

 JUSTICE ALITO took no part in the consideration or 

decision of these cases.