For
Your Information:
March 16, 2004
FTC Staff: Kansas
Bill Is Likely to Deter Gasoline Price Cuts
In response to a request from Kansas State
Senator Les Donovan, the staff of the Federal Trade Commission’s
Office of Policy Planning, Bureau of Competition, and Bureau
of Economics filed comments regarding Bill No. 2330, which
would bar the “below-cost” sale of motor fuel.
The bill would prohibit a “marketer” or “retailer”
from selling motor fuel below cost without any showing that
the below-cost sale harmed competition. According to the staff
comments, the bill is unnecessary and likely to deter pro-competitive
price-cutting within the state. In addition, the staff noted
that federal antitrust laws already cover below-cost pricing
that has the potential to harm competition.
In its comments, which are available on
the Commission’s Web site at www.ftc.gov,
FTC staff noted that low prices benefit consumers, and that
consumers are harmed only if below-cost prices allow a dominant
competitor to raise prices later to supracompetitive levels.
Further, the staff observed that economic studies, legal studies,
and court decisions indicate that below-cost pricing that
leads to monopoly occurs infrequently, and that below-cost
sales of motor fuel that lead to monopoly are especially unlikely.
Todd Zywicki, Director of FTC’s Office
of Policy Planning said that he was pleased to respond to
Senator Donovan’s request. Zywicki added, “Legislation
that has the effect of limiting competition in the sale of
motor fuels almost inevitably will harm consumers.”
The Commission vote authorizing staff to
file the comments with the Kansas House of Representatives
was 5-0. The comments represent the views of the staff of
the FTC’s Office of Policy and Planning, Bureau of Competition,
and Bureau of Economics and not necessarily those of the Commission
or any individual Commissioner.
Copies
of the document mentioned in this release are available from
the FTC’s Web site at http://www.ftc.gov
and also from the FTC’s Consumer Response Center, Room
130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.
Call toll-free: 1-877-FTC-HELP.
MEDIA CONTACT:
Mitchell J. Katz
Office of Public Affairs
202-326-2161
STAFF CONTACT:
James Cooper
Office of Policy Planning
202-326-3367
(FTC File No. V040009)
(http://www.ftc.gov/opa/2004/03/kansasgas.htm)
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Related Documents:
Comments of the Staff of the
Federal Trade Commission Bureau of Competition. Bureau of
Economics, and Office of Policy Planning (March 2004) to the
Assistant Majority Leader, Kansas Senate, Concerning Kansas
House of Representatives Bill No. 2330. (V040009)
- Text
of the Staff Comments [PDF 65KB]
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