WASHINGTON (Reuters) – The Federal Trade Commission 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 Aug. 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.”
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 said 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 said the FTC would reimpose “prior approval” requirements.
Lastly, she said 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.
(Refiles to add dropped quotation mark in paragraph 4)
(Reporting by Jeff Mason; Editing by Doina Chiacu, Jonathan Oatis and Dan Grebler)