numbers. The result was a massive company, the Standard Oil Trust, that controlled up to 90 percent of the U.S. oil industry and dominated the global market. In doing all this, Rockefeller really created the modern oil industry. He also invented the “integrated” oil company in which the oil flowed within the corporate boundaries from the moment it came out of the ground until finally it reached the consumer.
Rockefeller became not only the richest man in America but also one of the most hated, and, indeed, the very embodiment of monopoly in the robber baron age. In 1906 the administration of the trust-buster, President Theodore Roosevelt, launched the momentous case charging the Standard Oil Trust with restraint of trade under the Sherman Antitrust Act. In May 1911, the U.S. Supreme Court upheld lower court decisions and ordered the Standard Oil Trust broken up into thirty-four separate companies.6
Ever since the dissolution of the Standard Oil Trust, virtually every American law student interested in antitrust has studied that case. And, again and again, in the decades since 1911, the industry had been investigated for allegations and suspicions of colluding and restraining trade. Wouldn’t combinations, creating larger companies, only fan the flames of suspicion? But times had changed. The global playing field was much larger. Altogether, the large international oil companies now controlled less than 15 percent of world production; most of it was in the hands of the national oil companies, which had taken control in the 1970s. Some of these government-owned companies, such as Saudi Aramco, were becoming effective and capable competitors in their own rights, backed up by those immense reserves that dwarfed anything held by the traditional international oil companies.
In order to gain efficiency and bring down costs—and with the approval of antitrust authorities—some of the companies had combined, in key markets, their refineries and networks of gasoline stations. But none of these had sought to overturn the established lay of the land, the demarcations of corporate boundaries so clearly set in place by the 1911 Supreme Court decision.
THE MERGER THAT WASN’T
The chief executive of BP, John Browne, was among those who were convinced that something radical needed to be done. Trained first as a physicist at Cambridge University and then subsequently as a petroleum engineer, Browne had considered a career in academic research. But, instead, he had gone to work in BP, where his father had been a middle-level BP executive, for some time based in Iran. His mother was a survivor of the Auschwitz concentration camp, although this was known only to a very few until after her death in 2000.
Browne had entered BP on what was called an “apprentice program.” He quickly proved himself what the British called a high-flier, moving rapidly up in the organization. In 1995 he became chief executive. He was convinced, he said, that “we had to change the game. BP was stuck as a ‘middleweight insular British company.’ It was either up or out.”
During a BP board meeting, Browne laid out the rationale for a merger: BP was not big enough. It if did not take over another company, it was in danger of being taken over. BP needed to become bigger to achieve economies of scale, bring down costs, and take on larger projects and risks. And it needed the clout that came from scale to be taken “seriously” by the national companies. Browne was apprehensive that the board members would conclude that just one year after choosing him as CEO, he had taken leave of his senses. But, somewhat to his surprise, the board gave a contingent go-ahead.
The best fit for BP seemed to be Mobil, the second-largest of the successor companies to the Standard Oil Trust. In the many decades since the breakup, it had turned itself into one of the largest international integrated oil companies in its own right. It was also one of the most visible. Its flying horse insignia was known around the world; it had invented the “advertorial” in the right-hand bottom corner of the New York Times; and it was one of the biggest supporters of PBS, public broadcasting in the United States, most notably, of Masterpiece Theater. Moreover, BP had already established a joint venture with Mobil in European refining and marketing operations that had saved $600 million and had proved that the two companies could work together.
Mobil’s CEO was Lucio Noto. Known throughout the industry as “Lou,” he had wide international experience and his avocations were notably broad, extending from the