TOP STORIES -- March 15-20

Oil Prices Surge, Posing Threat to the Economy

The price of crude oil hit its highest level in 13 years, raising the risk to an economy struggling to create jobs.

The price for the benchmark grade of U.S. crude jumped 70 cents to $38.18 a barrel in New York trading Wednesday. It hadn’t closed at that level since Oct. 16, 1990. On Friday, the price was $38.08.

The chief catalyst for the latest run-up was an Energy Department report showing that U.S. gasoline inventories had fallen while demand rose.

With gasoline prices at record levels, well above $2 a gallon in California, energy is becoming a drain on many businesses and consumers. As for the U.S. gasoline market, supplies are constrained because many refineries are running full-out. And no new capacity is being added.

Stubbornly high energy costs run counter to what many figured would happen after the U.S. invasion of Iraq one year ago.

Meanwhile, OPEC, which supplies about one-third of the world’s oil, is planning to cut production in April as the winter heating season in the Northern Hemisphere ends.

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U.S. Files First WTO Claim Against China

Under pressure to more aggressively address a growing trade imbalance and protect U.S. chip makers, the Bush administration filed the first World Trade Organization complaint against China. The complaint alleges that China’s tax policies violate global trade rules by penalizing foreign semiconductor producers.

The WTO filing risks an escalation of trade tensions with China, which could retaliate with its own curbs on U.S. products.

China’s Ministry of Commerce is considering its response to the U.S. action, the ministry’s spokesman in Beijing said.

At issue is a 17% value-added tax that China levies on semiconductors. The Chinese government insists that its tax policies don’t violate WTO rules.

Earlier in the week, the AFL-CIO filed a petition asking the U.S. government to impose steep penalties against China, alleging that the country’s repression of labor had given its companies an unfair trade advantage by artificially depressing wages and production costs.

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BofA, FleetBoston Agree to Pay $675 Million

Bank of America Corp. and FleetBoston Financial Corp. agreed to pay $675 million in fines and restitution in the biggest settlement yet in the scandal over mutual fund trading abuses. BofA also agreed to measures that would force eight of 10 directors off the board of its mutual funds unit within a year.

The pact with the Securities and Exchange Commission and New York Atty. Gen. Eliot Spitzer resolves civil fraud charges that the banks let privileged investors engage in trading practices that hurt shareholders.

The settlement of unrelated cases was made jointly because BofA is buying FleetBoston. The firms neither admitted nor denied allegations. BofA must pay $250 million in restitution and $125 million in penalties. Fleet will pay $70 million in restitution and $70 million in penalties.

Also, in an accord with Spitzer’s office, the banks agreed to cut fees charged to investors by a total $160 million over five years.

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Vivendi Sues Diller’s Firm Over NBC Deal

Vivendi Universal said it had filed a lawsuit claiming that media mogul and Internet entrepreneur Barry Diller was standing in the way of its plans to sell its movie studio, theme parks and cable TV channels to NBC.

Vivendi claims in the suit that Diller, chairman of InterActiveCorp, is wielding his control over some of those assets to “gain leverage� in a separate tax dispute with Vivendi.

Vivendi is in the final stages of its $14-billion sale of Vivendi Universal Entertainment to NBC.

NBC’s owner, General Electric Co., has insisted that Diller give up the power he has to veto decisions affecting certain Vivendi Universal Entertainment assets. Sources close to GE said the company was prepared to consider waiving that condition.

For his part, Diller is eager to cash out the preferred shares he owns in Vivendi Universal Entertainment to focus on his expanding e-commerce businesses, sources said.

Diller wouldn’t discuss the suit. “Other than that we will prevail, we have nothing to say,� he said through a spokeswoman.

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Fed Holds Key Rate at Four-Decade Low

The Federal Reserve held its key interest rate steady and appeared to sound less upbeat about the pace of the economy’s growth.

Central bank policymakers said they voted to keep their benchmark short-term interest rate at a four-decade low of 1% and repeated that they could “be patient� with rates in part because inflation remains low.

Some wording changes in the Fed’s statement, however, suggested that Chairman Alan Greenspan and peers were “developing a bit of anxiety about the health of the economy,� one economist said.

The Fed said “new hiring has lagged,� a more downbeat assessment than on Jan. 28, when it said that “although new hiring remains subdued, other indicators suggest an improvement in the labor market.�

Also, the latest statement said economic output was expanding at a “solid pace,� a change from January’s reference to output “expanding briskly.�

To some Wall Street pros, the altered wording was a sign that the central bank might hold rates at current levels until 2005.

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EU Rejects Microsoft’s Bid to Avert Sanctions

European officials rebuffed Microsoft Corp.’s bid to avoid restrictions on its business practices and a hefty fine.

The company vowed to continue seeking a deal until a final court ruling ended the landmark case. That could be years away.

European Competition Commissioner Mario Monti is scheduled to announce sanctions against the software maker Wednesday, but Microsoft can appeal the order to Europe’s Court of First Instance in Luxembourg, a process that can take two to three years.

In the meantime, the sanctions would remain in place. Microsoft could be ordered to remove its multimedia software from some versions of its Windows operating system, to share more details about Windows with competitors and to pay hundreds of millions of dollars in fines.

Such penalties would be the stiffest so far against Microsoft, which has spent years fighting charges that it uses its dominance in operating systems to crush competitors.

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Healthcare Premiums in State Outpace Nation’s

Health insurance premiums rose faster in California last year than in the rest of the country, an ominous sign for a state struggling to maintain its economic competitiveness.

Private employers saw their health benefits bill jump by an average of 15.8% in 2003, compared with a national average of 13.9%, according to a study released by the Kaiser Family Foundation.

In 2002, the cost of healthcare insurance rose about 13% for both the state and the nation.

Analysts at the foundation, a nonprofit research group unrelated to Kaiser Permanente, attributed the higher rate of increase in 2003 partly to changes in managed-care plans in California that allow patients access to more doctors and hospitals.

Industry executives and consultants cited factors such as rising hospital expenses for new nurse staffing and seismic retrofit requirements. Fewer insurers are operating in the state, giving them more control over rates.

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Head of Writers Guild Resigns Amid Questions

Unable to shake concerns that he embellished his military and college-athletic past, the head of the union representing Hollywood film and TV writers resigned.

Charles Holland acknowledged in a letter that “deep misgivings and concerns lie in the minds of a great many members� about his leading the 9,000-member Writers Guild of America, West. Holland said the lingering questions would distract from the guild’s coming contract negotiations with studios.

The concerns about Holland’s past came to light when The Times reported in January that military and university records failed to support Holland’s claims that he served as an elite intelligence officer with the Army Green Berets and attended the University of Illinois on a football scholarship.

Former President Daniel Petrie Jr., who had been serving as vice president, replaced Holland.

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Edison Says Workers Doctored Survey Data

At least a dozen employees of Southern California Edison Co. manipulated customer satisfaction surveys by tricking a polling firm into calling people who would give glowing reviews -- namely, themselves.

Edison, which disclosed the scam, said the surveys helped persuade state regulators to grant the utility $28 million in service awards from 1997 to 2000. The Edison International unit pledged to return to customers any rewards it didn’t earn.

Edison said the employees doctored computerized data that was sent to a firm hired to survey supposedly random customers about their experiences with utility staff.

Edison said the employees, after encounters with unhappy customers, would enter invalid phone numbers so those customers could never be reached. Also, employees would enter their own phone numbers and, when called by the survey firm, provide flattering testimonials.

For a preview of this week’s business news, please see Monday’s Business section.