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Below-Cost Law Upheld

Alabama petroleum operators hailed a recent court ruling that upheld the state?s below-cost law that bars predatory pricing.

U.S. District Judge Lynwood Smith issued an injunction that permanently bars Murphy Oil Co. from selling below its cost at the company?s 25 outlets across the state. The decision comes 17 months after the same judge issued a temporary restraining order.

In his latest ruling, which Murphy is expected to appeal before the 11th Circuit Court of Appeals, Smith ordered Murphy to include at least 7-cents-per-gallon in its retail price for each petroleum grade to cover business costs. The judge also ordered Murphy to pay both a $117,000 fine for contempt of court and the plaintiffs? legal fees.

The judge concluded that Murphy, whose retail prices frequently fell as much as 20 cents below most retailers, "knowingly lowered its price" to injure competition.

Murphy, which operates gasoline outlets at Wal-Mart locations throughout the Southeast, was also planning to drop the 3-cent-per-gallon discount given to Wal-Mart loyalty cardholders, Alabama petroleum officials said.

One official not surprised that the judge upheld the constitutionality of the state?s Fuel Market Act, underscored the measure?s significance. "It?s critical that the law is in place if smaller companies are going to compete against hypermarkets," Bart Fletcher, executive vice president of the Alabama Oilmen?s Association/Alabama Association of Convenience Stores, told CSNews Online. The suit was filed by Huntsville-based jobbers, Thrasher Oil Co. and Campbell & Sons Oil Co.
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