Vanderbilt Law Review

First Page



"Divestiture" as applied to the oil industry has now clearly come to mean different things to different people, and often different things to the same people. On the one hand it has taken on all the attributes of a political slogan, very much like the "free silver"battle cry of the 1890's. It inspired the introduction of over twenty bills in the Ninety-Fifth Congress and served as a plank in the Democratic Party's platform of 1976, providing the one rallying point for the dozen or so candidates who sought the party's presidential nomination. In fact, during the autumn of 1976 political television advertisements proclaiming some candidates' support of oil company divestiture rained upon the viewing public with all the aesthetic elegance we associate with toothpaste and deodorant commercials-reaching a rather confusing high point with candidate Fred Harris's vow to break up the eighteen "oil monopolies." ...

In this Article, we plan to analyze the divestiture issue in more conventional, industrial-organization terms.' It is generally agreed that divestiture is an appropriate antitrust remedy for excessive market power when such power gives its possessor a means of excluding competition and controlling price. Stated in the language of industrial organization, the purpose of divestiture is to break up the interfirm modus operandi, described variously as oligopolistic rationalization, conjectural interdependence, conscious parallelism, or tacit collusive behavior, that is commonly associated with highly concentrated industries containing a small number of competitively forebearing rivals.'