Toledo union journal. [volume] (Toledo, Ohio) 1942-current, 1950-06-16
Little~Known Report
From Sweden Bares
Oil Cartel Agreements
By AIvaniae Hamilton and Cushman Reynoid
For Labor Press Association


ONE AMERICAN in every four owns car.
" To fuel those 35,0O0,00O automobiles we're
using more gasoline than ever before WHAT'S
more the price of the stuff we burn up on
the highways has never been higher. AT the
same time, we have more oil-fred heating
equipment then we need to, and we buy MIL
lions of dollars worth of fuel oil every year.
So the price Of petroleum prodcts is big
factor in family budgeting And don't think
for a minute that price is just the result of
supply and demand.
There's more than one story about oil prlc-
ing that ought to be told. Hidden away in
little-publicized report issued in Sweden by
a government committee investigating mo-
nopoly is one story. Hear it and you'll under
stand a lot about the price of gasoline. The
system is about the same everywhere
Sweden has no oil resources, and imports
all its petroleum. Back in 1880, according
to the report, American, Dutch and British
oil companies got together to divide the mar
ket, set prices, establish quotas, and control
the number of distributors in Sweden, But
things didn't stop there.
When the investigators finished probing
Swedish operations, they had turned up
document called the "AS rs" memo which ap-
peared to be the basic international cartel
agreement 1t was applicable in every country
in which members Of the cartel sold their oil
and specifically covered petroleum products
and products "in direct competition with any
petroleum product"
The agreement was of indefinite duration.
Sotr I'm
member company in each country. There were
to be local meetings to enforce the agreement
once a month. Provision was made for ex-
change or transfer of large sales contracts and
for uniform bids on government contracts.
system was worked out whereby companies
exceeding their sales quotas were to make
regular payments to outfits which didn't meet
them. In addition, rules governing sales 10
outsiders" were devised Meanwhile, the
companies were to meet each year to discuss
budgets for their distribution operations
Under the "AS IS" pact, price movements
of oil and gas in each country covered would
be set by majority vote of the cartel men,
bers, the basis for this happy democracy to
to be one vote for each one per cent OF the
quota held Advertising expenditures were to
be limited In each country to avoid waste
Any company which felt hurt by the prices
established could raise or lower them - but
only after discussion with the rest OF the
combine. The agreement was to be enforced
by committee in London on which each
company would be represented, the Swedish
investigators found.
Original group operating in Sweden ap-
pears to have been Standard Oil OF New
Jersey. Shell and BP, Swedish distributing
i0o lore
1884 memorandum discussing local applica-
ton of the AS IS agreement BY early 1885,
the Texas Company and Gulf appear to have
entered the Swedish market where schedule
was set up to cover prices for private motor
lists, bus companies, co-ops, landlord groups.
municipal and government agencies. Later in
1896, the combine decided to end all rebates
to private motorists. The previous year, the
companies agreed to cut off supplies to co-ops
unless the latter stopped giving members an
nual patronage refunds. In 1888 the five COM
panies agreed to discourage the building or
more service stations and to limit their stor-
age facilities That's the kind of compete
ton" the free enterprise boys keep scream
ing for in this country.
The combine had to 60 underground in
1899 because Gulf and Texas refused to sign
a new formal memo. The American bosses
were afraid they might get into trouble with
antitrust laws at home. However, 1t turned
combine for they were willing to sign coun-
try-by-country agreements.
Since the war, the oil companies have op-
Grated under a set of selling conditions know,
In Sweden at least as rules of life" How
ever, the srules' look pretty much like the
old cartel arrangements Moreover, the Swed-
ish committee decided that Selling condi-
tions" actually amount to price agreement
II there were any doubts the words of Sir
Brian Trench of Shell would allay them. He
told the Investigators that the old formal
agreement was cancelled because standard
Oil of New Jersey had been alarmed by GER
tain investigations into conditions which were
referred to by the antitrust legislation" This
was the antitrust suit against Standard and
Fl other major oil companies being prepared
- and finally filed in 1910 - by the Depart
ment of Justice in this country The 20 COM
panies and the American Petroleum Institute
were accused of consipirng to monopolize the
oil business in the US and abroad.
The Swedish committee had tough time
wringng the information from the oil men,
who were not anxious to reveal their story.
And they cried loud and hard when they
heard the committees report was to be made
public. The committee was unimpressed, how
ever. II said: ''That a publication fthe docu-
ments In question as pointed out by Stand
spntict okxyi o,tsIv he IN the r,reiudice nj