Wal-Mart Joins Oil Refiner To Overturn Fla. Predatory Pricing Law

Date: 1 Nov 2000 | posted in: Retail | 0 Facebooktwitterredditmail

As the story above suggests, Wal-Mart routinely engages in predatory pricing. But the company would prefer not to break the law in the process. To this end, Wal-Mart has joined with Murphy Oil in an effort to repeal a Florida law that prohibits predatory pricing among gasoline retailers.

The two companies financed a “consumer” group, the Coalition for Lower Gas Prices, which contends the Motor Fuel Marketing Practices Act costs Florida consumers $150 million annually in higher gas prices. Wal-Mart has launched a petition drive in its stores, complete with paid signature gathers, who ask shoppers, “Are you tired of paying too much for gasoline? Did you know that a 1985 Florida law prevents businesses from offering you the lowest possible price on motor fuel?”

“Don’t be fooled,” warned Rick McAllister, president of the Florida Petroleum Marketers Association. “Murphy Oil and Wal-Mart are not interested in anything but their bottom lines.”

The law prohibits oil refiners from selling gasoline at their own stations for less than the wholesale price they charge independent stations. In a vertically integrated industry, the law is necessary to prevent refiners from using their control of wholesale prices to drive independent retail competitors out of business.

California provides a vivid example of what might happen if the law is repealed. California has no similar statute and has the highest gas prices in the nation. In a report released last year, the state’s Attorney General attributed the high prices in part to the lack of independent gas stations and noted, “In both Florida and Texas, consumers benefit by a strong mix of independent marketers. . . [which] account for more than 50 percent of the gasoline sold to consumers.”

Murphy Oil operates gas stations at Wal-Mart stores in Florida. It was selling gas below the wholesale price at these stations until April, when a judge concluded the company was violating the law. In the 4th quarter of 1999, Murphy Oil lost $1 million on its retail sales, but netted $60 million on its refining and wholesale business.

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Stacy Mitchell

Stacy Mitchell is co-director of the Institute for Local Self-Reliance and directs its Independent Business Initiative, which produces research and designs policy to counter concentrated corporate power and strengthen local economies.