I

106TH CONGRESS

2D SESSION H. R. 5479

To prohibit certain discriminatory pricing policies in wholesale motor fuel

sales, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 17, 2000

Mr. THOMPSON of California (for himself, Mrs. CAPPS, and Mr. FILNER) introduced the following bill; which was referred to the Committee on Commerce

A BILL

To prohibit certain discriminatory pricing policies in

wholesale motor fuel sales, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Wholesale Motor Fuel

5 Fairness and Competition Restoration Act’’.

6 SEC. 2. FINDINGS.

7 The Congress finds that—

8 (1) both wholesale and retail motor fuel prices

9 are the result of a number of complex factors, in10 cluding those related to supply, refining, consumer
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1 demand, and oil company cost, pricing, and mar2 keting practices;

3 (2) certain cost, pricing, and marketing prac4 tices employed by the oil companies are unfair and

5 anticompetitive, and contribute to the unjustified

6 price of retail motor fuel charged the American con7 sumer;

8 (3) among the unfair and anticompetitive oil

9 company practices are price zoning, redlining, dis10 criminatory wholesale motor fuel pricing, and a com11 plex system of cost allocation that hides the factors

12 on which wholesale costs are based;

13 (4) the oil companies’ practice known as price

14 zoning is one by which prices for motor fuel are set

15 solely because of the retail station’s geographic loca16 tion unrelated to cost-of-business factors;

17 (5) price zoning allows an oil company to artifi18 cially increase or depress retail motor fuel prices in

19 order to secure an unfair market advantage against

20 competitors;

21 (6) the oil companies engage in a practice

22 known as redlining, whereby a refiner refuses to sell

23 motor fuel to distributors or particular geographic

24 markets;
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1 (7) redlining allows an oil company to force

2 concessions from a distributor and affords the com3 pany the opportunity to exert undue influence in a

4 particular area or region;

5 (8) the oil companies engage in a practice of

6 discriminatory wholesale pricing of motor fuel based

7 on the relationship of the purchaser to the oil com8 pany and the degree of competition they provide;

9 (9) discriminatory pricing allows oil companies

10 to charge different wholesale prices to company

11 owned and operated retail stations, franchisees, and

12 independent retailers though all may be situated in

13 the same community and face the same competitive

14 and operating factors;

15 (10) the oil companies engage in a complex sys16 tem of cost allocations by which they employ rebates,

17 incentives, credits, and market enhancement allow18 ances that hide the factors on which wholesale prices

19 are based or published;

20 (11) the complex system of cost allocation al21 lows oil companies to post a ‘‘wholesale price’’ that

22 is far different from the actual wholesale price that

23 would be revealed if the cost factors were publicly

24 identified and appropriately allocated; and
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1 (12) it is appropriate for the Federal Govern2 ment to prohibit these unfair oil company cost, pric3 ing, and marketing practices, to restore fair and

4 competitive practices to the wholesale sale of motor

5 fuel, and to allow American consumers to assess for

6 themselves the factors that contribute to the price

7 changes they pay at the retail pump.

8 SEC. 3. PRICE DISCRIMINATION PROHIBITION.

9 (a) PROHIBITION.—

10 (1) IN GENERAL.—It shall be a violation of this

11 Act for an owner or operator of a terminal facility

12 to sell motor fuel from the terminal facility to a dis13 tributor or retailer at a price in excess of the price

14 it charges any other distributor or retailer, including

15 a distributor or retailer which it owns or with which

16 it is affiliated.

17 (2) PRICE DETERMINATION.—For purposes of

18 this subsection, the price an owner or operator of a

19 terminal facility charges a distributor or retailer

20 which it owns or with which it is affiliated shall be

21 the price determined pursuant to the regulations

22 issued under section 4(a).

23 (3) EXCEPTION.—A sale shall not be in viola24 tion of this subsection if it is made pursuant to the
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1 terms of a franchise or sales contract entered into

2 before October 17, 2000.

3 (b) CIVIL PENALTY.—The Federal Trade Commis4 sion may assess a civil penalty, not to exceed $1,000,000,

5 for each violation described in subsection (a).

6 (c) CRIMINAL PENALTY.—Whoever knowingly vio7 lates subsection (a) shall be fined under title 18, United

8 States Code, or imprisoned not more than 5 years.

9 (d) EFFECTIVE DATE.—This section shall take effect

10 6 months after the date of the enactment of this Act.

11 SEC. 4. FULL DISCLOSURE.

12 (a) REQUIREMENT.—The Federal Trade Commis13 sion, in consultation with the Secretary of Energy, shall

14 issue regulations requiring full disclosure by refiners and

15 distributors of their wholesale motor fuel pricing policies,

16 including rebates, incentives, and market enhancement al17 lowances. Such regulations shall establish procedures for

18 determining the price an owner or operator of a terminal

19 facility charges a distributor or retailer which it owns or

20 with which it is affiliated.

21 (b) EFFECTIVE DATE.—The regulations issued under

22 subsection (a) shall take effect 6 months after the date

23 of the enactment of this Act.

24 (c) PUBLIC DISSEMINATION.—The Federal Trade

25 Commission shall ensure that all information acquired
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1 pursuant to the regulations issued under subsection (a)

2 are made available to the public, except trade secrets and

3 commercial or financial information protected from disclo4 sure under subsection (b)(4) of section 552 of title 5,

5 United States Code (commonly referred to as the Freedom

6 of Information Act). Such information may be dissemi7 nated through the Energy Information Administration.

8 SEC. 5. OWNERSHIP STUDY AND REPORT.

9 Not later than 18 months after the date of the enact10 ment of this Act, the Federal Trade Commission, in con11 sultation with the Secretary of Energy, shall transmit to

12 the Congress a report containing the results of a study

13 of whether ownership or operation by a refiner of a facility

14 for the retail sale of motor fuel has anticompetitive effects

15 on the price of motor fuel. Such report shall include any

16 recommendations for legislative or administrative actions

17 the Federal Trade Commission, in consultation with the

18 Secretary of Energy, considers appropriate.

19 SEC. 6. DEFINITIONS.

20 For purposes of this Act, any term defined in section

21 101 of the Petroleum Marketing Practices Act (15 U.S.C.

22 2801) shall have the meaning given the term in that Act.

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