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Gas distributor agrees to change ways, pay fine, says AG

Release date: 8/1/2007

McLeod Oil and Home Oil accused of pressuring Durham gas station to hike prices after Katrina

Raleigh: A gas distributor accused of illegally conspiring to fix prices and trying to force a Durham gas station to raise its prices by $0.40 a gallon has agreed to change its ways and pay $25,000, Attorney General Roy Cooper said today.

“Gas prices are high enough,” said Cooper. “We won’t tolerate suppliers trying to force retailers to raise prices even higher.”

Under a consent judgment signed Monday by Wake County Superior Court Judge Robert H. Hobgood, fuel distributors McLeod Oil Company, Inc. and Home Oil, Inc. of Mebane are barred from conspiring to raise or fix prices for any product or service. The judgment prohibits the defendants from trying to set the price of gas at stations they supply and from establishing a minimum price above which stations must sell their gas.

The companies must also pay $25,000 in civil penalties and may not retaliate against anyone who refused to peg gas prices or cooperated with the Attorney General’s investigation.

The judgment resolves a suit brought by Cooper in October of 2005 alleging that McLeod Oil and Home Oil conspired with gas stations they supply to fix the price of gas sold in Durham County. Cooper’s office found out that McLeod Oil and Home Oil were pressuring gas stations to raise their prices by at least 20 cents a gallon when one station refused to go along with the price hikes.

In September and October of 2005, prices at the pump skyrocketed in North Carolina and across the nation after Hurricanes Katrina and Rita hit the U.S. Gulf Coast.

As alleged in Cooper’s complaint, McLeod Oil and its affiliate, Home Oil, had an agreement to supply gas to A&P Mini Mart at 1709 Glenn School Road in Durham. According to an affidavit filed with the Attorney General’s complaint, representatives from McLeod came to the store on September 28, 2005 and demanded that the station immediately raise gas prices by 40 cents a gallon. McLeod said that competing gas stations also supplied by McLeod were angry with A&P Mini Mart’s low prices, and that it needed to be “in the ballpark” of the other stations’ prices. The station refused to hike its prices.

In retaliation, McLeod padlocked A&P Mini Mart’s gas pumps. When the station again declined to raise prices the next week, McLeod removed all of the gas from the underground tanks at A&P Mini Mart. Soon after Cooper’s office filed suit, the defendants agreed to remove the locks and supply the station with gas to sell at its usual rate.

“Price fixing hurts competition and consumers’ wallets,” said Cooper “We’re sending a message to other companies that we expect them to do right by consumers and small businesses or we’ll hold them accountable.”