FOR YOUR INFORMATION............................JANUARY 30, 1992
UTAH'S PROPOSED FUEL LEGISLATION COULD RAISE GASOLINE PRICES, FTC STAFF ADVISES
Proposed legislation before the Utah legislature to broaden prohibitions against below-cost retail pricing of gasoline could raise gas prices for consumers in Utah, Federal Trade Commission staff said in comments made public today. The draft legislation, which would amend the Utah Motor Fuel Marketing Act, "would tend to insulate gasoline refiners and marketers from competition, and thereby could cause gasoline prices in Utah to increase," according to the FTC staff letter signed by Claude C. Wild III, Director of the FTC's Denver Regional Office. "The legislation may inhibit vigorous competition and add costs to the distribution of gasoline in Utah that do not exist in other states," the letter says.
The staff comments cite state and Department of Energy studies that tend to refute an apparent premise of both the Act and the proposed amendments to it -- that refiners who own retail outlets sell gasoline to those outlets at below-cost prices in an attempt to drive franchised and independent retailers out of business.
"The state and DOE studies have revealed no instances of predatory behavior by major gasoline refiners," according to the staff comments, and, even if predatory behavior were found, it would be subject to prosecution under existing state and federal laws.
The FTC staff comments further say if the bill passes, "[s]hort term price discounts designed to attract new customers may be deterred," and "[r]efiners may be prevented from realizing all the efficiencies of vertical integration, which can often reduce transaction and search costs and lower prices to consumers."
- more - Utah Fuel Act Comments--01/30/92)
Staff comments were submitted at the request of Constance B. White, Coordinator, Legal Affairs, State of Utah's Department of Commerce. The comments represent the views of the staff of the FTC's Denver Regional Office and its Bureau of Competition. They are not necessarily the views of the Commission or any individual Commissioner.
Copies of the comments are available from the FTC's Public Reference Branch, Room 130, 6th St. and Pennsylvania Ave., N.W., Washington, D.C. 20580; 202-326-2222; TTY 1-866-653-4261.
# # #
MEDIA CONTACT: Brenda A. Mack, Office of Public Affairs 202-326-2182
STAFF CONTANT: Claude C. Wild III, Denver Regional Office 1405 Curtis Street, Suite 2900 Denver, Colorado 80202 303-844-2271