By the OGJ Online Staff
WASHINGTON, DC, May 8 -- The US Federal Trade Commission Monday said a 3-year investigation of major refiners has found no illegal marketing and distribution activities by them in Arizona, California, Nevada, Oregon, and Washington.
FTC initiated the investigation to explore differences in the price of gasoline between California cities Los Angeles, San Francisco and San Diego. Regarding the particular question that was investigated -- whether there was a violation of antitrust laws -- the investigation produced no evidence of illegal conduct by the refiners.
The commissioners' report said "[t]he investigation produced no evidence of horizontal agreement on price or output at any level of supply."
It noted that refiners often use "zone pricing," the setting of wholesale prices in distinct geographic areas, but there was no evidence of collusion between oil companies in that practice.
FTC also said, "The investigation revealed no evidence of conspiracy or coordination" in marketing practices known as "redlining" -- refiners' practice of preventing independent gasoline distributors (jobbers) "from competing with them to supply branded gasoline to independent dealers in metropolitan areas."
In the absence of such a conspiracy, redlining "likely would be evaluated under the rule of reason," which "would require the commission to show actual or prospective consumer harm." However, the investigation "uncovered no evidence that any refiner had the ability profitably to raise price market-wide or reduce output at the wholesale level, nor did it find a situation in which a refiner adopted redlining in a metropolitan area and increased market-wide prices."
As a result of the findings, FTC voted 4-0 to close the investigation. Chairman Robert Pitofsky recused himself.
Commissioner Mozelle Thompson said although he voted with the majority, he was "somewhat troubled by the practice of site-specific redlining that some West Coast refiners utilize as part of their distribution strategies."
Thompson said, "Such vertical restraints could be unlawful in those circumstances where -- whether in the Western States or other gasoline markets -- the practice leads to higher-than-otherwise wholesale prices."
Thompson said, "should the commission find evidence in any future investigation that site-specific redlining results in anticompetitive effects without generating countervailing consumer benefits, it would challenge the practice."
