Antitrust Law Daily Wrap Up, ANTITRUST NEWS: District of Columbia sues ExxonMobil and its gasoline distributors, (Aug 29, 2013)

The District of Columbia filed a lawsuit against ExxonMobil Oil Corporation and its gasoline distributors for Washington, D.C., to stop enforcement of exclusive-supply agreements that make one group of affiliated distributors the only suppliers of Exxon-branded gasoline in D.C., Attorney General Irvin B. Nathan announced today. The complaint, filed in D.C. Superior Court, alleges that the exclusive-supply agreements violate the District’s Retail Service Station Act.

The affiliated distributors—Capitol Petroleum Group, LLC, Anacostia Realty, LLC, and Springfield Petroleum Realty, LLC—are the exclusive gasoline suppliers for about 60% of the 107 gasoline stations in D.C. The District’s lawsuit challenges agreements that make these affiliated distributors the exclusive suppliers of Exxon-branded gasoline for the 27 independently-operated Exxon stations in D.C., or about 25% of the gasoline stations in the city.

The exclusive-supply agreements, or earlier versions of them, were established by ExxonMobil and were transferred in 2009 to the affiliated distributors, along with ExxonMobil’s ownership of the 30 D.C. Exxon stations to which the agreements then pertained. According to the District’s complaint, these supply agreements can now be enforced either by the affiliated distributors or by ExxonMobil through its separate agreements with other area distributors. The effect of these distribution agreements is to reinforce the exclusive-supply terms of the Exxon franchise agreements that Exxon assigned to Anacostia and Springfield; both sets of agreements compel each independent retail dealer operating an Exxon-branded station in D.C. to obtain Exxon-branded gasoline from one of the three distributor-defendants, according to the complaint.

The District contends that both the franchise and the gasoline distribution agreements, individually and in combination, are marketing agreements that, in violation of the District’s Retail Service Station Act, prevent the 27 independent retail dealers that operate Exxon-branded stations in D.C. from buying Exxon-branded gasoline from other suppliers. The District alleges that the exclusive-supply agreements allow the affiliated distributors to “set the wholesale prices paid for Exxon-branded gasoline in D.C., depriving D.C. residents . . . of the benefits of competition in the wholesale supply of Exxon-branded gasoline.” “Under the District’s gasoline marketing law, a retail gasoline dealer is free to purchase a brand of gasoline from any supplier of the brand,” Attorney General Nathan said. “Our suit seeks to end these unlawful supply restrictions, increase wholesale competition, and bring down retail prices at the pump.”

Companies: ExxonMobil Oil Corp.

News: FranchisingDistribution Antitrust DistrictofColumbiaNews