Antitrust Law Daily Wrap Up, ANTITRUST—M.D. Fla.: Gasoline supplier’s below cost sales deemed isolated, inadvertent, (Mar 6, 2015)

By Greg Hammond, J.D.

A Florida gasoline supplier that admitted to selling gasoline at retail below cost was exempt from predatory pricing claims under the “meeting competition” and “isolated and inadvertent” defenses of the Florida Motor Fuel Marketing Practices Act (FMFMPA). The federal district court in Orlando consequently granted summary judgment in favor of the supplier (NJN Systems, Inc. v. Sunoco, Inc., March 5, 2015, Presnell, G.).

Background. NJN Systems, Inc. is an independent retailer of Sunoco brand gasoline products that operates a facility in Daytona Beach, Florida. Sunoco, Inc. supplies gasoline to NJN and also operates retail gas stations throughout the greater Daytona Beach area. NJN filed suit, alleging that Sunoco violated the FMFMPA and the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) by selling gasoline at retail below cost. Sunoco moved for summary judgment, arguing that while it admits it has sold gasoline at retail below cost, it has done so under the “meeting competition” and “isolated and inadvertent” defenses of the FMFMPA.

FMFMPA. The FMFMPA prohibits fuel sales that are below cost or sold in a discriminatory fashion that damage competition. There are two exceptions to this rule, however: (1) An isolated, inadvertent incident involving prohibited activity (isolated and inadvertent defense); and (2) a refiner’s sale below refiner cost or a non-refiner’s sale below non-refiner cost made in good faith to meet an equally low retail price of a competitor selling fuel of like grade in the same relevant geographic market (meeting competition defense).

The court first determined that “isolated” means “sporadic”—events that happen more than once, but not constantly or regularly. Because it was uncontested that there were only three instances of below-cost, below-competition sales over the course of 13 months that were not part of larger pattern, they were deemed sporadic and exempt from application of the FMFMPA under the isolated and inadvertent defense.

Next, the court found that the relevant geographic area includes the peninsula and mainland portion of Daytona Beach, as Sunoco contended, because consumers can drive between the two via a bridge. Consequently, in including prices from the greater Daytona Beach area, the undisputed pricing demonstrated that Sunoco engaged in its pricing activity in order to meet competition and was not motivated by predatory intent. The pricing was therefore made in good faith, and Sunoco was exempt from application of the FMFMPA under the meeting competition defense.

FDUTPA. Because the FDUTPA has a safety provision that exempts all actions which are specifically permitted by federal or state law, and because the complained of activity falls within the ambit of the FMFMPA defenses, Sunoco could not be in violation of FDUTPA for alleged predatory pricing. Sunoco’s motion for summary judgment was therefore granted.

The case number is 6:13-cv-1657-Orl-31KRS.

Attorneys: Kurt Edward Alexander (Rigdon, Alexander & Rigdon, LLP) for NJN Systems, Inc. Richard Barry Schwamm (Haliczer, Pettis & Schwamm, PA) for Sunoco, Inc.

Companies: NJN Systems, Inc.; Sunoco, Inc.

Cases: Antitrust StateUnfairTradePractices FloridaNews