Oil Prophets

Summer 2014

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28 Oil Prophets LEGAL CORNER Aside from our Alabama Underground and Aboveground Storage Tank Trust Fund, it has always been my belief that the most important piece of legislation the gasoline industry in Alabama has is the Alabama Motor Fuel Marketing Act ("AMFMA"). It is hard to imagine the AMFMA has just turned 30 years old! The Alabama Legislature passed the law in 1984. While I am certainly biased, I believe without doubt that the AMFMA has greatly benefitted the gasoline industry in the State of Alabama in the past 30 years. This includes not only the gasoline marketers but the consuming public. We have fought numerous fights both in the Legislature and in courts around the state challenging this law, but we have prevailed time and time again. This was never more readily apparent than when a bill was introduced in 2004 to repeal the AMFMA outright. The "byline" of such efforts is always that the law serves to keep gas prices higher than they otherwise would be without the law. The repeal interests had as an ally in 2004 the American Automobile Association ("AAA"). I am not completely sure of AAA's allegiance to the cause but have always assumed that their logic was that cheaper gas meant more people driving and, therefore, more people using AAA services. However, AAA posts on its web site on a daily basis the average retail price of gasoline in each state for all 50 states and the District of Columbia. Day in and day out, year end and year out, Alabama is typically in the top 10 states with the cheapest gasoline prices in the country. In 2004, we were able to show the Legislature in a public hearing that Alabama typically had anywhere from the seventh to the ninth cheapest gas in the country, and AAA's own data showed that. Maybe even more significant was the fact that the AAA data showed at the time we submitted it to the House committee, that of the seven states on AAA's list that showed an average price for unleaded gasoline lower than Alabama, three of those seven states – Missouri, New Jersey and South Carolina – had gasoline below cost laws like the AMFMA. Consequently, retail gasoline prices in Alabama were at this time in 2004 cheaper than every state in the country that does not have a below cost selling law – 37 such states plus the District of Columbia – save four. Accordingly, gasoline prices are HIGHER in states – in virtually every instance – without a below cost selling law than in those states with such laws. One of the most important court decisions in the past 30 years interpreting this case was McGuire Oil Company, et al. v. Mapco. In that case Mapco, an independent marketer, had contended that "as an independent, it could price one to two cents below the major branded competition and still take advantage of the meeting competition defense." In a very succinct and clear decision, the Alabama Supreme Court in 1992 made two significant findings in upholding the AMFMA. First, it found that ONE competitor can show that such competitor was injured and bring a claim under the law. It determined that "injury" under the Act does not require a showing of injury to competition as a whole. This was a major decision not fully appreciated by most marketers. Mapco, like most others who have challenged the law over the years, argued that a federal anti-trust type proof of injury to competition as a whole must be shown. That type of proof is virtually unattainable in a retail gasoline market. It requires proving a competitor's market share within a given market, proof of intent to recoup losses once competition is driven out of a market, and other related types of proof issues Below Cost Sales Law: 30 Years Later H. Dean Mooty, Jr. Mooty & Associates, P.C.

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