Virginia Kills Below-Cost Measure

RICHMOND, Va. - Virginia's gasoline stations can continue selling gas at below cost to gain a competitive advantage.

The House of Delegates Commerce and Labor Committee killed legislation yesterday that would have prohibited operators from selling gas for less than they paid for it, according to the Richmond Times-Dispatch.

Lawmakers on the panel voted 12-9 against endorsing the proposal. The full Senate had already approved it.
Proponents of the legislation were disappointed, saying the bill could have helped small, independent gasoline operators survive against chains that enter markets and then undercut prices until they gain market share.

Opponents argued that the proposal was not necessary because federal and state antitrust laws already protect businesses. And besides, they argued, similar legislation in other states only caused pump prices to rise, the report said.

Sen. Charles R. Hawkins (R-Pittsylvania), who sponsored the bill, said he was disappointed in its defeat. "This is a bill that keeps competition at the pump," he said.

But Del. James K. O'Brien (R-Fairfax) asked whether lawmakers were going to enact legislation every time a small merchant is hurt by a larger retailer. "It sends a terrible signal to what we will do in Virginia in the future," O'Brien said. "This bill represents the greatest government intrusion."

Bonnie Burley Crews doesn't believe so. She was hoping the General Assembly would provide some relief to her family's Burley's Market near Lynchburg, which she said has been hurt by competitors who have undercut prices. "We have faced competition many times and we are not afraid of it," she told lawmakers. "Competition is good, but predatory pricing is destroying that competition."

The culprits, according to smaller operators, are convenience store operators such as Sheetz Inc. and Wawa Inc., who have expanded southward into Virginia from their home base in Pennsylvania. Sheetz and Wawa operate roughly 7 percent of the 4,000-plus gas stations in Virginia, generating less than 1 percent of the gasoline sales in the state, the report claims.

Proponents argue that Sheetz and Wawa have cut prices to eliminate competition. Not true, says Mike Cortez, vice president and chief legal counsel for Sheetz. His company tries to bring gasoline to market as cheaply and inexpensively as possible. "Our goal is to make money at every gas station," he said.
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