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    FTC Seeks to Undercut N.Y. Bill

    Commission sends letter to Gov. Pataki criticizing proposed predatory pricing legislation; ESPA, PMAA, NYACS tell feds to back off.

    By John Lofstock

    ALBANY, N.Y. -- Three convenience store and petroleum marketing industry organizations today lashed out against a Federal Trade Commission (FTC) letter sent to New York Gov. George Pataki criticizing the state's pending legislation to snuff out predatory gasoline pricing.

    "I'm disappointed the FTC has again decided to stick its nose in state legislative affairs," Tom Peters, executive vice president at the Empire State Petroleum Association (ESPA), told CSNews Online. "They did it in Virginia, they did it in New York, and both times they have used flawed logic to take a stand against an important piece of legislation."

    In June, both state houses unanimously approved the Motor Fuel Marketing Practices Act, Bill S04522. Both houses also approved a second franchise encroachment bill, which would bar oil companies and refiners from operating retail stations within 1.5 to 2 miles of dealer/franchisee locations. ESPA introduced the original language in the MFMPA and strongly supports the franchise encroachment bill, Peters said. The bills are being considered independently by Gov. Pataki.

    In its letter to Gov. Pataki, the FTC claims each of these provisions "could significantly raise the cost of gasoline to consumers."

    "This legislation could outlaw more types of pricing behavior than federal antitrust laws do and, therefore, it runs the risk of penalizing pro-competitive price cutting that benefits consumers," added Joe Simons, director of the FTC's Bureau of Competition.

    "New laws to limit price cutting and prevent refiners from opening new gas stations are especially inappropriate at a time when many Americans are concerned about gasoline prices," said Ted Cruz, director of the FTC's Office of Policy Planning.

    Dan Gilligan, president of the Petroleum Marketers Association of America (PMAA), a national champion of below-cost legislation, said the FTC's letter is remarkably similar to the "flawed letter sent to the Virginia legislature earlier this year."

    The FTC's involvement in Virginia in the spring came on the eve of the legislature casting its vote on whether to improve a comprehensive fuel sales bill, effectively swaying some lawmakers to vote against the measure.

    "Something is just not right about this action," Gilligan said. "The FTC finds the time to send a letter to Governor Pataki defending below-cost tactics but has not found the time to respond to U.S. Congressman Ray LaHood who has questioned their fundamental analysis. PMAA very much disagrees with the position of the FTC on this and we will urge them to respond to the LaHood letter."

    PMAA and ESPA are working together to gather additional facts to counter the FTC action, Gilligan said.

    According to Peters, the FTC's letter wasn't entirely a surprise. He met with representatives from the governor's office earlier this week and they indicated they were gathering information from all sources, including the FTC.

    "The governors council is doing its research on the bill before it gets presented to the governor," Peters said. "What they are going to find is that both houses strongly support the measures and believe they are in the best interest of New York consumers."

    Jim Calvin, president of the New York Association of Convenience Stores (NYACS), has been a staunch supporter of the below-cost bill. He told CSNews Online the bill would be a significant tool in the state's quest to maintain a competitive marketplace and urged the federal government to let the state handle its own affairs. "Memo to the FTC, butt out," he said.

    By John Lofstock
    • About John Lofstock

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