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FTC Takes On Gasoline Price Manipulation & Will Scrutinize Station Mergers

 |  August 30, 2021

The Federal Trade Commission (FTC) will crack down on practices that may harm consumers at the gasoline pump and seek to deter “unlawful” mergers in the oil and gas industry, FTC Chair Lina Khan told the White House in a letter last week.

The letter, obtained by Reuters, was addressed to White House economic adviser Brian Deese and promised to start an investigation of abuses in the “franchise market” for retail fuel stations, among other steps.

Deese, in an initial August 11 letter to Khan, had asked the FTC to investigate why “gas prices tend to rise more quickly to adjust to spikes in oil prices than they fall when the price of oil declines.”

Khan replied, “I am especially interested in ways that large national chains may ‘restore’ higher prices through collusive practices, and I will direct our staff to investigate any signs of this type of conduct.”

Related: FTC’s Lina Khan Pushes For More M&A Blocking

Khan told Deese she also was concerned that the FTC’s approach to merger reviews in recent years had “enabled” significant consolidation in the industry and created “conditions ripe for price coordination and other collusive practices.”

To tackle the issue, Khan wrote that the FTC would “identify additional legal theories” to challenge mergers in which dominant players in the industry were buying up family-run businesses.

She said the commission would also study its policies that require divestitures during mergers of gas stations in overlapping markets to ensure that was not encouraging further consolidation and anticompetitive behavior.

To discourage what she called proposals for “illegal mergers,” Khan wrote that the FTC would reimpose “prior approval” requirements.

Lastly, she wrote that the Commission would probe practices related to fuel stations that are franchised.

“We will need to determine whether the power imbalance favoring large national chains allows them to force their franchisees to sell gasoline at higher prices, benefiting the chain at the expense of the franchisee’s convenience store operations,” Khan wrote.

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