FTC agrees to investigate antitrust allegations against Big Oil

By Erin Voegele | August 27, 2013

Sens. Amy Klobuchar, D-Minn., and Chuck Grassley, R-Iowa, recently announced that the Federal Trade Commission has agreed to examine possible anti-competitive practices by oil companies to limit access to biofuels.

Earlier this month, the senators sent a letter to Attorney General Eric Holders and FTC Chairwoman Edith Ramirez asking the U.S. Department of Justice and FTC to investigate recent reports that indicate oil companies may be undermining efforts to distribute renewable fuels, specifically higher ethanol blends.

Klobuchar and Grassley noted within the letter that there are allegations that franchise agreements have been used by oil companies to prevent franchisees from selling higher level ethanol blends. “By forcing a franchisee to carry premium gasoline as a condition of carrying regular gas, the oil company may be using its economic power over its franchisee to effect a tying arrangement in violation of the Sherman Act,” Grassley and Klobuchar continued in the letter. “This conduct may also violate the Gasohol Competition Act of 1980, which prohibits discrimination or unreasonable limits against the sale of gasohol or other synthetic motor fuels.”

Within her response letter, Ramirez assured the senators that her office will evaluate the information they provided and the concerns they expressed under pertinent antitrust standards. “Protecting American consumers from anticompetitive or fraudulent practices in the energy sector has long been one of our most important responsibilities, and I can assure you that we will continue to make every effort to identify, prevent, and prosecute practices in petroleum and other markets that violate any statute or rule that the agency enforces,” wrote Ramirez in her letter.

“Consumers deserve to have access to homegrown renewable fuels that not only lower costs at the pump but also help boost our energy security,” Klobuchar said. “It is imperative that the Administration investigate any possible anti-competitive behavior by the oil companies that might limit consumers’ access to renewable fuels. I’m pleased to see the Federal Trade Commission is taking steps to investigate whether certain practices by oil companies may be impeding competition, and I will continue to work to ensure that Americans can continue to realize the benefits of cheaper, cleaner renewable fuel.”

“The allegations from retailers about possible anticompetitive practices from Big Oil are disheartening, but not surprising, knowing the lengths Big Oil will go to in order to keep biofuels out of the fuel supply,” Grassley said. “It’s going to take an ‘all-of-the-above’ approach to wean the United States off of foreign sources of oil, so it only makes sense that we all work together. I appreciate the FTC taking a look at the allegations and look forward to their conclusions.”