State of Mont. v. SuperAmerica
| Decision Date | 24 February 1983 |
| Docket Number | No. CV-79-30-M.,CV-79-30-M. |
| Citation | 559 F. Supp. 298 |
| Court | U.S. District Court — District of Montana |
| Parties | STATE OF MONTANA, Plaintiff, v. SUPERAMERICA, A DIVISION OF ASHLAND OIL, INC., et al., Defendants. |
Mike Greely, Atty. Gen., State of Mont., Jerome J. Cate, Asst. Atty. Gen., Chief, Antitrust Enforcement Bureau, Helena, Mont., for plaintiff.
Sherman V. Lohn, Garlington, Lohn & Robinson, Missoula, Mont., W. Donald Dresser, Howrey & Simon, Washington, D.C., for defendants.
FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER
This matter came on for trial before the court without a jury commencing on Wednesday, the 2nd day of June, 1982 through June 4, 1982 and continued on August 17 through August 19, 1982. The plaintiff State of Montana was represented by Jerome J. Cate, Special Assistant Attorney General, and by Sarah Power and Dorothy McCarter, Assistant Attorneys General, all of Helena, Montana. The defendant SuperAmerica, a division of Ashland Oil, Inc., was represented by Sherman V. Lohn, of the law firm of Garlington, Lohn and Robinson, Missoula, Montana, and by Ray S. Bolze, John C. Peirce and W. Donald Dresser of the law firm of Howrey and Simon, Washington, D.C. The parties proceeded to call their various witnesses and to present their evidence, and the court, having reviewed all the pleadings, briefs and documents on file herein, including each party's proposed findings of fact and conclusions of law, and having heard and seen the evidence presented, and being fully advised in the premises does hereby make the following findings of fact and conclusions of law:
FINDINGS OF FACT
1. This action was commenced in the United States District Court for the District of Montana, Missoula Division, on March 29, 1979, by the State of Montana against SuperAmerica, a division of Ashland Oil, Inc., and various other gasoline retailers doing business in Missoula, Montana. All of the original named defendants, other than SuperAmerica, have reached settlements with the State, were dismissed pursuant to Rule 54(b), Federal Rules of Civil Procedure, and are no longer parties to this action.
2. The State's complaint in this lawsuit contained three counts. The first count alleged that SuperAmerica violated Section 1 of the Sherman Act, 15 U.S.C. § 1, by engaging in a continuing combination and conspiracy in unreasonable restraint of interstate commerce, and by agreeing with its competitors to fix, maintain and stabilize the price of gasoline sold to natural persons residing in Missoula, Montana. The second count realleged the facts in count one and sought injunctive relief. The third count alleged that the actions of SuperAmerica served to restrain trade in the State of Montana in violation of sections 30-14-103 and 30-14-205, Montana Code Annotated (1979).
3. The defendant, SuperAmerica, is an unincorporated division of Ashland Oil, Inc., which, during the period of time from October 1, 1976 to date, sold gasoline at retail to natural persons residing in and passing through the State of Montana at the SuperAmerica stations located at 111 Orange Street North and 1701 Brooks Street, Missoula, Montana.
4. The State alleges that it has standing to pursue its Sherman Act claim on behalf of the natural persons who purchased gasoline in Missoula pursuant to the parens patriae provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which added Sections 4C through 4H of the Clayton Act, 15 U.S.C. §§ 15c-15h. While SuperAmerica disputes the State's standing to pursue the Sherman Act claim in its capacity as parens patriae, because of the alleged lack of adequate notice to class members and other failures to comply with the parens patriae statute, that issue need not be addressed in view of the court's resolution of the merits.
5. There were at least sixty retail gasoline outlets in Missoula during the period from 1976 to 1979. Consequently, the retail gasoline business in Missoula was intensely competitive.
6. A large fraction of the population in Missoula buys gasoline at the lowest price available. There was evidence presented that a difference of just one cent between the prices offered at different retail outlets is sufficient to cause many Missoula residents to purchase gasoline from the lower priced outlet.
7. SuperAmerica's declared policy and general marketing approach during the period from October 1976 through March 1979 was to attempt to sell its gasoline at prices that were equal to or lower than the prices charged by all other retail outlets in Missoula.
8. Several of SuperAmerica's competitors in Missoula filed complaints with the State of Montana's Department of Business Regulation concerning SuperAmerica's low gasoline prices in Missoula. J. Gary Louquet, a competitor of SuperAmerica, wrote a letter to Senator Baucus complaining about SuperAmerica's low prices. Further, on occasion some of SuperAmerica's competitors attempted to complain directly to SuperAmerica regarding SuperAmerica's low prices. SuperAmerica did not respond to such complaints. SuperAmerica's employees were instructed by Ashland not to discuss gasoline prices with any competitor. There was no evidence of non-compliance with that instruction.
9. Evidence of complaints about SuperAmerica's prices by its competitors is inconsistent with the view that SuperAmerica colluded with those competitors in the price setting process.
10. Several retail gasoline dealers in Missoula, Montana, established an organization known as the Missoula Retail Gasoline Dealers Association ("MRGDA"). Cardinal Oil, the entity from which Ashland purchased the SuperAmerica stores in Missoula, was a member of the MRGDA for approximately one year, in 1967, after which it dropped out. The State alleges in its various memoranda that SuperAmerica was a member of the MRGDA. However, minutes of the MRGDA's meetings, produced at trial, make no mention of SuperAmerica, and provide no record of SuperAmerica's paying dues into the Association. An officer of the Association testified that SuperAmerica was not a member. A preponderance of the evidence does not support a finding that SuperAmerica, or any of its employees, was a member of, or otherwise participated in the activities or deliberations of, the MRGDA.
11. SuperAmerica did not engage in any of the so-called "cartel enforcement actions" generally attributed to members of the MRGDA, including billing back procedures, denial of credit, cutting of allocation and threats.
12. The March 18, 1978, Missoulian article by Jonathan Krim regarding gasoline price-fixing in the Missoula area did not affect SuperAmerica's pricing behavior. The court finds that after the article appeared, SuperAmerica continued to adhere to its policy of pricing at or near the lowest price charged by its competitors.
13. SuperAmerica independently determined what price to charge for gasoline that it sold in Missoula and how to run its business there.
14. SuperAmerica often posted its retail gasoline prices on large signs so that those prices could be seen by customers from the street. Data submitted by the State's expert showed that while gasoline prices in the Missoula area tended to follow each other, they were not exactly identical, nor were the changes in price made in perfect unison. Therefore, the court finds that SuperAmerica's use of price signs was procompetitive, offered useful price guidance to consumers and does not support an inference that the price signs were posted pursuant to any collusive agreement between SuperAmerica and its competitors.
15. SuperAmerica periodically surveyed the prices that its competitors charged for gasoline. Those surveys were not taken pursuant to any agreement between SuperAmerica and its competitors, or for the purpose of enforcing any agreement. SuperAmerica was entitled to note what prices were being charged by its competitors. It was in SuperAmerica's economic interest to price its gasoline at or near the lowest price charged in Missoula, not only because this generated gasoline sales, but also because it tended to attract customers to SuperAmerica who ultimately purchased grocery items from inside the two SuperAmerica stores.
16. Missoula gasoline retailers, including SuperAmerica, engaged in consciously parallel pricing practices, i.e., they took into consideration the prices charged by their competitors, and usually set their own prices at or near those of their competitors.
17. Given SuperAmerica's policy of attempting to match the lowest gasoline prices in the market area, it would be expected that SuperAmerica, in the exercise of independent business judgment, would decrease its prices in response to a price cut by a competitor. SuperAmerica's responsiveness to price changes by competitors was not inconsistent with the hypothesis that its prices were the result of unilateral pricing decisions.
18. Identical, simultaneous price changes among competitors do not, in every situation, suggest collusive behavior. In the instant case, it was not economically irrational for SuperAmerica to engage in price following, and unilateral business judgment, rather than collusion, accounted for SuperAmerica's price following practices.
19. Consciously parallel pricing behavior is equally indicative of competition and collusion. The record supports an inference that SuperAmerica's pricing behavior resulted from that entity's individual determination that its business interests would best be advanced by pricing its gasoline at or near the lowest price on the market.
20. The existence of parallel pricing behavior does not support an inference of conspiracy in this case for several reasons, including the fact that (a) such pricing behavior was not inconsistent with SuperAmerica's business interests, (b) SuperAmerica had a declared policy of pricing at or near the lowest price on the market, and (c) SuperAmerica instructs its employees not to engage in...
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