Opinion ID: 1272032
Heading Depth: 1
Heading Rank: 3

Heading: the international uranium cartel

Text: Several months after this case was filed, United raised a new allegation  that Gulf's and GAC's monopolistic efforts were part of a worldwide conspiracy of certain international uranium producers to fix the prices, allocate the markets, and control the production of uranium. United's efforts to secure discovery of records relating to this international uranium cartel became the major focus of this litigation, and GAC's failure to supply cartel-related information was the principal basis for the sanctions order and default judgment entered by the trial court. The precise facts regarding the development and operation of the cartel are not completely clear, largely because full cartel-related discovery was not made in this case. However, several matters are well-established. First, as GAC concedes, there was a uranium cartel made up of various international uranium producers, which operated from at least 1972 to 1975. Foreign governments, including those of Canada, South Africa, France and Australia, played some role in the formation and operation of the cartel. The nature of the roles played by those governments, particularly by the Canadian Government, is a disputed question in this case, the resolution of which is critical to the disposition of one of the major issues raised by GAC on appeal. We will examine this question in Section II C, infra, of this opinion. Second, it is established that Gulf, acting through Gulf Canada, was a member of the cartel no later than June 1972. It is also clear that the top executives of Gulf Energy, the immediate predecessor of GAC, were aware of the cartel and received information concerning its activities. At least two high-level officials of Gulf Energy attended one or more cartel meetings. All of these executives later became key personnel of GAC. Third, the basic purposes of the cartel are unquestionably clear. GAC's counsel stated to the trial court: The purpose of [the cartel] was to set terms and conditions of sale. It was to set floor prices. And it was to set quotas and divide up who could produce how much. They were going to restrict supply. It was in its intention a cartel in every sense of the word. (Emphasis added.) One of the Gulf attorneys who had advised Gulf that it was legal for it to join the cartel later told a Congressional subcommittee impaneled to investigate cartel activities: There, of course, was never any doubt about what the `cartel' intended to accomplish. It was to completely frustrate free competition. International Uranium Cartel: Hearings Before the Subcomm. on Oversight and Investigation of the House Comm. on Interstate and Foreign Commerce, 95th Cong., 1st Sess., Serial No. 95-95, p. 89 (1977) [hereinafter cited as Hearings on International Uranium Cartel ]. Fourth, between 1972, when the cartel apparently began, and 1975, when this suit was filed, the price of uranium in the United States increased from approximately $6.00 per pound to approximately $40.00 per pound. Beyond these four established facts-the existence of the cartel, Gulf's active participation therein, the cartel's anticompetitive purposes, and the dramatic increase in uranium prices during the cartel's existence  there is little about the cartel that is not disputed by the parties. One of the principal disputes is whether the cartel has any relevance to the contracts at issue in this litigation, which will be discussed in Section II B, infra, of this opinion. D.