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State closes three-year gasoline price investigation Department of Law says it couldn’t prove antitrust violation between companies selling gasoline in Alaska; ‘tacit agreement’ must be proved, department says Petroleum News Alaska
The Alaska Department of Law has closed a three-year investigation into the pricing of petroleum products in Alaska after finding no evidence of price fixing at the pumps, Attorney General Bruce Botelho said Nov. 21.
“The investigation was initiated in 1999 in response to public complaints about the high price of gasoline in Alaska in comparison to other states,” Botelho said. “I am closing the investigation because there is insufficient evidence indicating a violation of the antitrust laws.”
Historically, the price of gasoline on the West Coast of the United States has averaged 11 cents per gallon higher than the average retail price throughout the nation. The price of gasoline in Alaska has tended to be 9 cents per gallon higher than the price of gasoline on the West Coast.
Price differential higher 1995-98 The Department of Law said the investigation was prompted when gasoline prices in Alaska rose to as much as 17 cents a gallon higher than West Coast prices between 1995 and 1998. Beginning in 1999, the spread between prices in Alaska and the West Coast narrowed dramatically, more closely tracking the historical spread between Alaska and the other states.
The department said that in order to establish a violation of Alaska’s antitrust statute or the comparable federal law, there must be evidence that two or more companies entered into an express or tacit agreement to fix petroleum prices. A showing that companies charged prices in excess of the competitive level, or raised and lowered prices in a parallel fashion, is not enough to establish the existence of a tacit agreement.
Instead, evidence of uniform pricing must be accompanied by additional evidence demonstrating that two or more parties agreed to engage in cooperative pricing behavior. Evidence of this could include actions contrary to an entity’s independent economic interests; departure from normal business practices; motive to conspire; opportunity to conspire; high level of inter-company communications; or past antitrust violations involving collective action.
Investigation began in 1999 The Department of Law began the investigation in 1999 by requiring refiners and distributors of petroleum products in the state to produce documents. The thousands of pages of internal company documents produced in response to the state civil investigative demands — hundreds of boxes — remain confidential by state statute.
In addition to reviewing internal company documents and detailed analysis of pricing data, the department also interviewed witnesses and potential witnesses and took formal depositions of several current and former oil company employees and executives.
The department said its investigation found that Alaska’s gasoline industry is highly concentrated and that four marketers accounted for the vast majority of gasoline sales.
“When there are few sellers in a market like Alaska it is easier for them to observe how competitors react to decisions regarding output and prices, and each may take into account the potential impact of its own actions on market prices and the potential responses from other sellers,” Botelho said. “This type of interdependent behavior on the part of sellers often leads to parallel pricing, but that is not, in the absence of an express or implied agreement to set prices, a violation of the antitrust laws so long as each business develops and implements its pricing and output decisions independently. The investigation has not produced evidence of an express or implied agreement to set prices or to otherwise violate antitrust laws.”
In closing the investigation without further action, Botelho said he expected the Department of Law to continue to monitor retail gasoline prices.
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