Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Marathon Petroleum allegedly conspired to restrain trade, monopolize wholesale gasoline market in Kentucky, (May 13, 2015)

By Greg Hammond, J.D.

Kentucky Attorney General Jack Conway has filed a lawsuit against Marathon Petroleum Co., LP, alleging that the gasoline supplier conspired to restrain trade and monopolize the wholesale market in Kentucky. The complaint was filed in the federal district court in Louisville (Commonwealth of Kentucky v. Marathon Petroleum Co., LP, May 12, 2015).

Attorney General Conway alleges that Kentucky residents and businesses have been purchasing gasoline at elevated and unpredictable prices at retail locations around the state. Marathon, the largest supplier of gasoline in Kentucky, purportedly has an approximate wholesale market share of 90 to 95 percent. Conway claims that Marathon maintains and/or attempts to maintain its market dominance through the use of anticompetitive deed restrictions, supply arrangements, and exchange agreements.

The deed restrictions purportedly limit the number of retail gasoline locations in Kentucky and sometimes require that only Marathon gasoline be sold by the property purchaser. Similarly, the anticompetitive supply arrangements supposedly limit retailers’ ability to obtain gasoline from Marathon’s competitors and bind the retailers to adhere to certain volumetric purchases, subject to penalty. Lastly, the exchange agreements Marathon allegedly enters into with horizontal competitors have the effect of (1) dividing or allocating production and (2) reducing the motivation for competitors to enter the Louisville and Northern Kentucky markets to supply reformulated gasoline. Conway alleges that the deed restrictions, supply arrangements, and exchange agreements are all per se anticompetitive.

“For almost two decades, Marathon has been allowed to run rampant in Kentucky,” stated Kentucky Attorney General Jack Conway. “Marathon owns and operates the only refinery in Kentucky, and it maintains its wholesale monopoly by making retailers and other potential suppliers enter into contracts that are outright anti-competitive. This conduct harms everyone who buys gas in Kentucky.”

The complaint asserts that by employing deed restrictions, supply agreements, and exchange agreements, Marathon: (1) unreasonably restrains trade in violation of Section 1 of the Sherman Act and the Kentucky Consumer Protection Act (KCPA); (2) monopolized, attempted to monopolize, or combined or conspired with others to monopolize in violation of Section 2 of the Sherman Act and the KCPA; (3) engaged in acts in commerce where the effect was to substantially lessen competition or to create a monopoly in any line of commerce, in violation of Section 14 of the Clayton Act; and (4) engaged in unfair, false, misleading, or deceptive acts or practices in the conduct of trade or commerce in violation of the KCPA.

The Kentucky attorney general seeks a permanent injunction, prohibiting Marathon from engaging in, enforcing, or renewing the deed restrictions, supply agreements, and exchange agreements, and requests damages and trebled damages; a civil penalty of $2,000 for each willful violation of the KCPA; restitution for any willful violation of the KCPA; restitution to be paid to the Commonwealth of Kentucky, including disgorgement of wrongfully-obtained revenues, earnings, profits, compensation, and benefits; and attorney fees.

The case number is 3:15-cv-354-DJH.

Companies: Marathon Petroleum Co., LP

News: Antitrust KentuckyNews