MISSISSIPPI LEGISLATURE

2000 Regular Session

To: Finance

By: Senator(s) Minor, Chaney, King, Robertson, Williamson

AN ACT TO CREATE THE "MOTOR FUEL MARKETING PRACTICES ACT"; TO PROHIBIT THE SALE BY A REFINER OF MOTOR FUEL AT A RETAIL OUTLET AT A PRICE WHICH IS BELOW REFINER COST, WHERE THE EFFECT IS TO INJURE COMPETITION; TO PROHIBIT THE SALE OF MOTOR FUEL AT A PRICE WHICH IS BELOW NONREFINER COST, WHERE THE EFFECT IS TO INJURE COMPETITION; TO PROHIBIT THE SALE OF MOTOR FUEL BY A REFINER AT A RETAIL OUTLET AT A PRICE THAT IS BELOW THE PRICE CHARGED BY THAT REFINER TO ANY WHOLESALER OR DEALER TO THE EXTENT THAT THE WHOLESALER OR DEALER RESELLS IN THE RELEVANT GEOGRAPHIC MARKET WHERE THE REFINER'S RETAIL PRICE IS IN EFFECT; TO PROHIBIT THE SALE FOR RESALE OF MOTOR FUEL AT A PRICE LOWER THAN THE PRICE AT WHICH THE SELLER SELLS MOTOR FUEL TO ANOTHER PERSON WITHIN THE SAME RELEVANT GEOGRAPHIC MARKET AS THE PURCHASER, WHERE THE EFFECT IS TO INJURE COMPETITION; TO PROHIBIT THE RECEIPT FOR RESALE OF MOTOR FUEL AT A PRICE LOWER THAN THE PRICE AT WHICH THE SELLER FROM WHICH THE MOTOR FUEL IS PURCHASED OR RECEIVED CONTEMPORANEOUSLY SELLS MOTOR FUEL TO ANOTHER PERSON WITHIN THE SAME RELEVANT GEOGRAPHIC AREA, WHERE THE EFFECT IS TO INJURE COMPETITION; TO PROHIBIT REFINERS FROM SELLING MOTOR FUEL TO A WHOLESALER AT A PRICE WHICH IS HIGHER THAN THE NET PRICE AT WHICH THE REFINER CONTEMPORANEOUSLY SELLS MOTOR FUEL TO A DEALER IN COMPETITION WITH ANY RETAIL OUTLET SUPPLIED BY THE WHOLESALER, WHERE THE EFFECT IS TO INJURE COMPETITION; TO MAKE CERTAIN EXCEPTIONS TO SUCH PROHIBITIONS; TO PROHIBIT CERTAIN DISCRIMINATORY ALLOCATIONS OF MOTOR FUEL; TO MAKE CERTAIN EXCEPTIONS TO THE PROVISIONS OF THIS ACT; TO GIVE THE ATTORNEY GENERAL CERTAIN AUTHORITY TO INVESTIGATE COMPLAINTS REGARDING VIOLATIONS OF THIS ACT AND SEEK CERTAIN CIVIL PENALTIES AND INJUNCTIVE RELIEF FOR VIOLATIONS OF THIS ACT; TO GIVE PERSONS INJURED AS A RESULT OF VIOLATIONS OF THIS ACT THE RIGHT TO BRING ACTIONS TO ENJOIN SUCH VIOLATIONS; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. This act may be cited as the "Motor Fuel Marketing Practices Act."

SECTION 2. The Legislature finds that marketing of motor fuel is affected with the public interest and that fair and healthy competition in the marketing of motor fuel provides maximum benefits to consumers in this state. The Legislature further finds that independent motor fuel wholesalers and dealers are vital to maintaining healthy competition in the marketing of motor fuel. Certain marketing practices which impair such competition are contrary to the public interest. Under certain circumstances, below cost selling and discriminatory practices are unfair trade practices and restraints which adversely affect motor fuel competition, competitors and ultimately consumers. It is the intent of the Legislature to encourage competition and promote the general welfare of citizens of this state by prohibiting such unfair practices. It is further the intent of the Legislature that this act be construed liberally to effectuate its remedial purpose and without regard to judicial decisions under the federal antitrust laws pertaining to predatory pricing, injury to competition or antitrust injury.

SECTION 3. As used in this act:

(a) "Affiliate" means any person whose stock is more than fifty percent (50%) owned by, or who, regardless of stock ownership, is controlled by, or who, regardless of stock ownership, is under common control with, any refiner.

(b) "Competition" means the vying for motor fuel sales between two (2) or more sellers in the same relevant geographic market and includes any person who competes with another person for such sales in the same relevant geographic market.

(c) "Dealer" means any person, other than a refiner or wholesaler, who is engaged in the business of selling motor fuel at a retail outlet.

(d) "Delivered product cost" means:

(i) For a refiner, a refiner's posted terminal price per grade; plus all federal, state and local taxes and fees applicable to motor fuel, and freight charges to the retail outlet; and

(ii) For a nonrefiner, the per grade invoice cost to the nonrefiner net of any discounts shown on the invoice, which shall not be less than the posted terminal price of the nonrefiner's supplier; plus all federal, state and local taxes and fees applicable to motor fuel, and freight charges to the retail outlet.

Delivered product cost is to be determined separately for each grade of motor fuel.

(e) "Direct facilities cost" means the sum of the bona fide amount of rent which would reasonably be charged or paid in an arm's length transaction for the use of the specific individual retail outlet, including land, improvements and the equipment utilized for the sale of motor fuel; maintenance expenses; cost of signage; utilities; property taxes; insurance; and environmental compliance, such as testing, detection and containment systems; but not the costs of environmental cleanup and remediation. In determining a reasonable rental value for a specific retail outlet, the commercially acceptable rental rate of return for similar commercial properties and the prevailing rental amounts for comparable retail outlets in the relevant geographic market shall be considered. When motor fuel and other products or services are sold at a retail outlet, the direct facilities cost shall be determined based on the percentage of gross dollar receipts for motor fuel sales to the total gross dollar receipts. Direct facilities cost per gallon shall be determined by dividing the direct facilities cost by the gallons of all grades of motor fuel sold.

(f) "Direct labor cost" means the personnel costs incurred attributable to providing motor fuel sales at a retail outlet and includes, without limitation, the personnel costs relating to the purchase, storage, inventory, and sale of motor fuel, and environmental reporting and compliance, but does not include the costs of environmental cleanup or remediation. Except for unattended retail outlets where allowed by statute or local ordinances, the direct labor cost attributable to the sale of motor fuel shall not be less than the cost of one (1) employee's salary and benefits, based upon that employee's working those hours in which the retail outlet is providing motor fuel available to the public. When motor fuel is sold at the retail level along with other products or services, the direct labor cost attributable to the sale of motor fuel at the retail outlet shall be allocated based on the percentage of gross dollar receipts for motor fuel sales to total gross dollars sales receipts. Direct labor cost per gallon shall be determined by dividing the direct labor costs by the total gallons of all grades of motor fuel sold.

(g) "Motor fuel" means any petroleum product, including any special fuel, which is used for the propulsion of motor vehicles.

(h) "Nonrefiner" means any person, other than a refiner, engaged in the sale of motor fuel.

(i) "Nonrefiner cost" means the nonrefiner's delivered product cost, plus direct labor cost and the reasonable rental value of the retail outlet attributable to the sale of motor fuel by the nonrefiner. If motor fuel is sold with another item at a combined price, nonrefiner motor fuel cost shall also include the cost of the other item and the direct labor costs and the reasonable rental value of the retail outlet attributable to the retail sale of the item by the nonrefiner. Nonrefiner cost is to be determined separately for each grade of motor fuel.

(j) "Posted terminal price" means a refiner's posted price at a terminal, by grade of motor fuel, to the wholesale class of trade within a general trade area. If a refiner does not have a posted terminal price in a general trade area, such refiner's posted terminal price shall be deemed to be no lower than the lowest posted terminal price of motor fuel of like grade and quality of any other refiner selling to the wholesale class of trade in the general trade area.

(k) "Refiner" means any person who stores or exchanges motor fuel at a terminal facility and who sells or transfers motor fuel through the loading rack at such terminal facility, and includes an affiliate of such refiner with respect to such affiliate's sale of motor fuel.

(l) "Refiner cost" means a refiner's delivered product cost, plus direct labor cost and direct facilities cost of the retail outlet attributable to the retail sale of motor fuel by the refiner. If motor fuel is sold with another item, at a combined price, refiner cost shall also include the cost of the other item and direct labor costs and direct facilities cost of the retail outlet attributable to the retail sale of the item by the refiner. Refiner's cost is to be determined separately for each grade of motor fuel.

(m) "Relevant geographic market" means the geographic area of effective competition, with the price surveys maintained by competitors as a factor to be considered in determining such geographic area.

(n) "Rent" means the payment of an amount by an individual or agency in return for the right to occupy or use the property of another.

(o) "Retail outlet" means a facility, including land and improvements, where motor fuel is offered for sale at retail to the general public; to include facilities operating as a part of or in conjunction with an establishment selling nonmotor fuel products only to members.

(p) "Sale" or "sell" means any transfer, gift, sale, offer for sale or advertisement for sale in any manner or by any means whatsoever, including any transfer of motor fuel from a person to itself or an affiliate at another level of distribution, but does not include product exchanges at the wholesale level of distribution.

(q) "Terminal facility" means any inland, waterfront or offshore appurtenance on land used for the purpose of storing, handling or transferring motor fuel, but does not include bulk storage facilities owned or operated by a wholesaler.

(r) "Wholesaler" means any person, other than a refiner or dealer, who purchases motor fuel at a terminal facility and supplies motor fuel to retail outlets.

SECTION 4. (1) (a) It is unlawful for any refiner engaged in commerce in this state to sell any grade or quality of motor fuel at a retail outlet at a price which, after deducting any discounts received at the time of purchase, is below refiner cost, where the effect is to injure competition.

(b) It is unlawful for any nonrefiner engaged in commerce in this state to sell any grade or quality of motor fuel at a price which, after deducting any discounts received at the time of purchase, is below nonrefiner cost, where the effect is to injure competition.

(2) (a) An isolated, inadvertent incident involving activity prohibited pursuant to subsections (1) or (3) of this section shall not be a violation of this act.

(b) A refiner's sale below refiner cost or a nonrefiner's sale below nonrefiner cost made in good faith to meet an equally low retail price, net of any discounts received at the time of sale, of a competitor selling motor fuel of like grade in the same relevant geographic market, or of the same or similar items in combination with motor fuel of like grade, is not a violation of this act.

(3) Notwithstanding any other provision of law to the contrary, it is unlawful for a refiner, to sell any grade of motor fuel at a retail outlet at a price, net of any discount received at the time of purchase, that is below the price charged by that refiner to any wholesaler or dealer under written contract for the like grade and quality of motor fuel, to the extent that the wholesaler or dealer resells in the relevant geographic market where the refiner's retail price is in effect.

SECTION 5. (1) It is unlawful for any person engaged in commerce in this state:

(a) To sell for resale any grade of motor fuel at a price lower than the price at which the seller contemporaneously sells motor fuel of like grade and quality to another person within the same relevant geographic market as the purchaser; where the effect is to injure competition; or

(b) To knowingly receive for resale any grade of motor fuel at a price lower than the price at which the seller from which the motor fuel is purchased or received contemporaneously sells motor fuel of like grade and quality to another person and within the same relevant geographic market as the purchaser; where the effect is to injure competition.

(2) A sale of motor fuel of like grade and quality at different prices to persons within the same relevant geographic market is not a violation of this section if the difference in price is due to:

(a) A difference in the cost of sale or delivery resulting from differing methods or quantities in which the grade of motor fuel is sold or delivered; or

(b) A material difference in the seller's investment in equipment or improvements at the retail outlets.

(3) A sale made in good faith to meet an equally low price of a competitor selling motor fuel of like grade is not a violation of this section.

(4) It is unlawful for a refiner to sell any grade of motor fuel to a wholesaler under written contract at a price which, after adding federal, state and local taxes and inspection fees, is higher than the net price, after deducting all allowances, rebates and discounts, at which the refiner contemporaneously sells motor fuel of like grade and quality to a dealer in competition with any retail outlet supplied by such wholesaler, where the effect is to injure competition; except to the extent that the difference in price is attributable to a rebate, rent subsidy or other concession which is offered to the wholesaler on proportionately equal or comparable terms.

(5) An isolated, inadvertent incident involving the activity prohibited pursuant to subsection (1) or (4) of this section shall not be a violation of this act.

SECTION 6. (1) It is unlawful for a supplier engaged in commerce in this state to limit or allocate the quantity of motor fuel available to a reseller purchasing under contract from such supplier because such reseller was prevented by such supplier from purchasing the minimum quantities such reseller was obligated to purchase from such supplier in the immediately preceding year, unless the limitations or allocations are applied in a reasonable and nondiscriminatory manner among all resellers supplied by such supplier under contract in a general trade area and the supplier's own retail outlets.

(2) It is unlawful for a supplier to limit or allocate the quantity of motor fuel available to a reseller purchasing under contract from such supplier, unless the limitations or allocations are applied in a reasonable and nondiscriminatory manner among all resellers supplied by such supplier under contract in a general trade area and the supplier's own retail outlets.

SECTION 7. The provisions of this act shall not apply to the following retail sales:

(a) A bona fide clearance or a final business liquidation sale of existing motor fuel inventory at the retail outlet for the purpose of discontinuing trade in such motor fuel.

(b) A sale of the existing motor fuel inventory at a retail outlet by a fiduciary or other officer under the order or direction of any court.

(c) Sales made during a grand opening to introduce a new or remodeled business not to exceed three (3) days, which grand opening shall be held within sixty (60) days from the date the new or remodeled business begins operations.

SECTION 8. (1) Any person who knowingly violates this act shall be subject to a civil penalty not to exceed Five Thousand Dollars ($5,000.00) per violation. Each day that a violation of this act occurs shall be considered a separate violation, but no civil penalty shall exceed One Hundred Fifty Thousand Dollars ($150,000.00). Any such person shall also be liable for attorneys' fees and shall be subject to an action for injunctive relief.

(2) The Attorney General shall have the authority to investigate any complaints regarding violations of this act and may issue subpoenas to require the production of documents and records as part of its investigation of a complaint. If any person shall refuse to comply with a subpoena issued under this section, the Attorney General may petition a court of competent jurisdiction to enforce the subpoena and assess such sanctions as the court may direct. Refiners shall provide the Attorney General reasonable access to the refiners' posted terminal price.

(3) The Attorney General may bring a civil action in any court of competent jurisdiction to seek a civil penalty or injunctive relief authorized by this section. If the Attorney General prevails in a civil action, the court shall award reasonable attorneys' fees as it deems appropriate. All funds recovered by the Attorney General shall be deposited in the General Fund.

SECTION 9. (1) Any person injured as a result of an act or practice which violates this act may bring an action in chancery court to prevent, restrain or enjoin such violation or threatened violation. Such action shall be brought in the county where the act or practice complained of has occurred or is occurring.

(2) Upon proper application by the plaintiff, the court shall grant preliminary injunctive relief if the plaintiff shows:

(a) That he is a proper person to seek the relief requested.

(b) There exist sufficiently serious questions going to the merits to make such questions a fair ground for litigation; and the court determines, on balance, the hardships imposed on the defendant and the public interest by the issuance of such preliminary injunctive relief will be less than the hardship which would be imposed on the plaintiff if such preliminary injunctive relief were not granted. A showing of irreparable injury or inadequate remedy at law is not required.

(c) The standards specified in paragraphs (a) and (b) of this subsection shall also apply to actions for injunctive relief brought by the Attorney General under Section 8 of this act.

(3) In issuing a temporary restraining order or a preliminary injunction, the court, in its discretion, and having due regard for the public interest, may require or dispense with the requirement of a bond, with or without surety, as conditions and circumstances may require. If a bond is required the amount shall not be greater than Fifty Thousand Dollars ($50,000.00).

(4) In an action brought under this section, it shall not be necessary that the amount of actual damages to the plaintiff be alleged or proved, but where such actual damages are alleged and proved, the plaintiff in the action, in addition to such injunctive relief and reasonable attorneys' fees, shall be entitled to recover from the defendant the actual damages sustained by the plaintiff. If the court finds that the defendant's violation was willful or part of a pattern and practice of conduct in violation of this act, the court shall treble the amount of actual damages awarded to the plaintiff. The court shall award a reasonable attorney's fee to the prevailing plaintiff and may award a reasonable attorney's fee to the prevailing defendant if the court finds that the action brought lacked a reasonable basis in law or fact.

(5) In the event that no injunctive relief is sought or required, any person injured by a violation of this act may maintain an action in a court of general jurisdiction in the county in which the alleged violation has occurred for actual and treble damages and the other noninjunctive relief set forth in subsection (4) of this section.

SECTION 10. Any action brought by the Attorney General shall be brought within two (2) years after the alleged violation occurred or should reasonably have been discovered. Any action brought by any other person shall be brought within one (1) year after the alleged violation occurred or should reasonably have been discovered, except that a private action brought under Section 9 of this act for unlawful price discrimination shall be brought within two (2) years from the date the alleged violation occurred or should reasonably have been discovered.

SECTION 11. This act shall take effect and be in force from and after July 1, 2000.