FTC will investigate biofuels anticompetitive practices

Senators request to examine whether oil companies limiting access to renewable fuels will be examined by Federal Trade Commission.

Sens. Amy Klobuchar (D., Minn.) and Chuck Grassley (R., Iowa) called on the U.S. Department of Justice and Federal Trade Commission (FTC) to investigate possible anticompetitive practices by oil companies that limit consumer access to homegrown renewable fuels.

In a letter to Attorney General Eric Holder and FTC Chair Edith Ramirez, Klobuchar, chair of the antitrust subcommittee, and Grassley, ranking member of the Senate Judiciary Committee, urged the Administration to take action to address recent reports indicating that oil companies may be undermining efforts to distribute renewable fuels, including higher ethanol/gasoline blends, that help boost the nation's energy security and lower the price of gas for consumers.

In a response letter, Ramirez assured the senators that the FTC will evaluate their concerns. "I can assure you that we will evaluate the information you have provided and the concerns you have expressed under pertinent antitrust standards," the letter notes.  

The Senators' letter cites allegations that the oil industry is mandating retailers to carry and sell premium gasoline, thereby blocking the use of the current retail infrastructure to sell renewable fuels. Station owners who wish to sell renewable fuels would bear the cost and logistical burden of having to install additional infrastructure to do so.

In one case, an oil company is alleged to be using its franchise agreements to preclude franchisees from offering higher-level ethanol blends to their customers.

"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," the senators wrote.

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.

“The promise of renewable fuels is rapidly becoming a reality and introducing much-needed competition to the transportation fuels sector. Given the implication these alleged activities, if true, could have on competition in the marketplace, we urge you to investigate them and consider whether any action is necessary," the senators wrote to Holder and Ramirez. "We look forward to working with you to ensure that Americans can continue to realize the benefits of cheaper, cleaner renewable fuel.”

Both Grassley and Klobuchar expressed appreciation in FTC's decision to look at the allegations and look forward to their conclusions, they said in a joint statement.

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