Competition Bureau Concludes There Is No Evidence To Support Allegations Against Gasoline Suppliers In Conception Bay South, Newfoundland

OTTAWA, March 17, 2000 - The Competition Bureau has concluded that there is no evidence to support allegations of price fixing, abuse of dominance, price maintenance or conspiracy by gasoline suppliers in Conception Bay South, Newfoundland.

In May 1999, the Bureau received complaints from an independent gasoline retailer in the Conception Bay South area, as well as from a Newfoundland consumers group, alleging that an independent retailer was being forced out of business, or was unable to compete, as the result of conduct by several major gasoline suppliers.

The Competition Bureau examined the complaints under the following sections of the Competition Act:

• section 45 (relating to conspiracy),
• section 79 (abuse of dominance),
• section 61 (price maintenance) and
• section 50 (1) (a) (price discrimination).

The examination included a review of information provided by the independent gasoline retailer, other industry participants and publicly available data.

Allegations and conclusions of the examination are as follows:

• It was alleged that a major gasoline supplier controls 90% of the wholesale market in Newfoundland partly because of an exchange agreement that it has with one of the largest suppliers in the area. The Bureau determined that there are four major wholesale suppliers of gasoline in Newfoundland. The supplier that was the subject of the complaint has a market share of less than 35% and does not have the exchange agreement as was claimed.
• It was alleged that a major gasoline supplier charged the independent retailer a higher price than was charged to another dealer in the area during a specified time period in May 1999. There was no evidence to indicate that this was true. The increase in wholesale prices during the relevant time period was consistent with an increase in crude oil prices.
• It was alleged that a representative of the independent retailer's supplier implied that the supplier would like to see a 3 cents per litre price differential between full serve and self serve stations. The alleged comments were made three years ago, have not been made since and the independent retailer has confirmed that his pricing decisions are made independently.
• It was also alleged that a major gasoline supplier and some of its competitors were involved in a conspiracy to fix prices in an effort to force the independent out of business. There is no evidence to suggest that such an agreement exists. Further, the pricing patterns in the relevant market are consistent with a competitive retail environment.
• The Bureau's examination also indicated that gasoline retailers in Conception Bay South are competing with one another in a meaningful way. This is illustrated in part by the relatively low prices in the area compared to some nearby regions.

The Competition Bureau is an independent law enforcement agency whose mandate is to maintain and encourage fair competition in Canada. The constitutional power to regulate retail gasoline prices rests with the provincial governments.

Contact:

Cynthia Grant
(819) 994-0349