FTC Questions Unocal Ruling

Federal trade commissioners on Wednesday expressed serious doubts about an administrative judge’s recent decision to dismiss antitrust charges against Unocal Corp.

The Federal Trade Commission filed a complaint against Unocal in March last year, saying the company’s anti-competitive tactics could cost consumers up to $500 million a year. But in November, Administrative Law Judge Michael Chapell threw out the case, concluding that legal doctrine allows firms to petition the government for an edge over rivals, even if the regulations sought are anti-competitive.

The FTC is weighing an appeal by the agency’s staff attorneys. The FTC had sought an injunction that would prevent Unocal from collecting money from its patents on clean-burning fuel to meet strict California environmental standards.

The five commissioners Wednesday balked at Unocal’s argument that it should be exempt from charges that it misled California regulators into adopting clean-fuel standards on which it had applied for patents.

“Your interpretation of [legal doctrine] is that it protects lying to the government in order to induce the grant of a monopoly?” Commissioner Thomas Leary asked Unocal attorney Martin Lueck.

Lueck said yes.

“The antitrust laws were not intended to reach this kind of speech in the political arena,” he told the commissioners.

Rival oil companies, including Exxon Mobil Corp., asked the FTC to investigate the patent claims in early 2001 after the U.S. Supreme Court let stand a ruling that they owed patent fees to Unocal.

Unocal has denied it misled California regulators.