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
(V920004)
(utah-com)