FOR YOUR INFORMATION........................March 26, 1991
ARKANSAS PETROLEUM ACT COULD RAISE GASOLINE PRICES,
FTC STAFF SAYS
Proposed legislation in the Arkansas legislature to prohibit
below-cost retail gasoline pricing could result in higher prices
at the pump for consumers in that state, according to staff at
the Federal Trade Commission in comments made public today.
The draft legislation, titled the Arkansas Petroleum Trade
Practices Act, "may make it more difficult for firms to adjust
their prices in response to changing conditions of demand and
supply," according to the FTC staff letter signed by Tom Carter,
Director of the FTC's Dallas Regional Office. "Such legislation
is likely to add costs to the distribution of gasoline in Arkan-
sas that do not exist in other states, costs that would be borne
by Arkansas consumers and visitors," Carter said.
The FTC staff comments cited state and Department of Energy
studies which provide evidence that tends to refute an apparent
premise of the legislation -- that refiners who own retail out-
lets 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. Even if predatory behavior were found, such
conduct would be subject to prosecution under existing state and
federal laws, staff said.
The FTC staff comments further stated that if the bill pass-
es, "Short term price discounts designed to attract new customers
may be deterred." In addition, the comments said, "Refiners 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 -
Arkansas Petroleum Act--03/26/91)
The staff comments were submitted at the request of State
Senator W.D. Moore Jr., Chairman of the Insurance and Commerce
Committee of the Arkansas Senate. The comments are the views of
the staff of the Commission's Dallas Regional Office and its
Bureau of Competition, and are not necessarily those of the
Commission itself 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: Bonnie Jansen, Office of Public Affairs
202-326-2161
STAFF CONTACT: Tom Carter, Dallas Regional Office
100 N. Central Expressway, Suite 500
Dallas, TX 75201
214-767-5503
(V910008)
(ark-gas)€