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.
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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