A Knock for Ethyl

JUDICIARY A Knock for Ethyl

General Motors and Standard Oil of New Jersey jointly control Ethyl Gasoline Corp. Ethyl Gas owns patents on a fluid--chief components are tetraethyl lead and ethylene dibromide--which reduces knocking in automobiles.

To a layman's eye, Ethyl Gasoline Corp. is pretty nearly an ideal business.*About 70% of all gasoline consumed in the U. S. is Ethyl-treated. The company does not make tetraethyl lead (Du Pont does); doesn't extract bromine from sea water for ethylene dibromide (Dow Chemical Co. does); does not make gasoline nor sell it (123 refiners, 11,000 jobbers do).

Ethyl Gasoline Corp. issues licenses to the 123 refiners who make 88% of all U. S. gasoline. The refiners treat their gas with this antiknock compound, may sell the treated gas only to jobbers who are also licensed by the top company.

Terming this set-up a restraint of trade violating the 1890 Sherman Anti-Trust Law, the Justice Department began proceedings against Ethyl in 1937. By last November, the corporation's appeals from adverse decisions had carried the case to the U. S. Supreme Court. Last week, in a decision so far-reaching that no one dared guess at its extent, the Court (Justice Harlan Stone's opinion) held:

>That the company had violated the Sherman Act;

>That anti-trust and patent laws do not sanction "regulation of prices and the suppression of competition among the purchasers of the patented article."

> "Appellant [Ethyl] has made use of its dominant position ... to exercise control over prices and marketing policies of jobbers ... to make its attitude toward price-cutting a pervasive influence. . . "

>"By the authorized sales of the fuel by refiners to jobbers, the patent monopoly over it is exhausted, and after the sale neither appellant nor the refiners may longer rely on the patents to exercise any control over the price at which fuel may be re-sold."

Said Assistant Attorney General Thurman Arnold, U. S. trust-hound: ". . . Most important decision on the subject that has ever been handed down by any court. The decision goes far beyond the oil industry. It will serve as a guide to the Department in our general investigation of patents."

*Estimate of Ethyl Gas Corp.'s gross 1938 sales: $73,000,000.

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