99TH CONGRESS 1ST SESSION H. R. 2406 To amend the Petroleum Marketing Practices Act to promote fair competition in the distribution of motor fuel. IN THE HOUSE OF REPRESENTATIVES MAY 7, 1985 Mr. SYNAR (for himself and Mr. TAUKE) introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To amend the Petroleum Marketing Practices Act to promote 1 fair competition in the distribution of motor fuel. Be it enacted by the Senate and House of Representa 2 tives of the United States of America in Congress assembled, 3 SECTION 1. This Act may be cited as the "Petroleum 4 Marketing Practices Act Amendments of 1985". 5 6 DEFINITIONS SEC. 2. (a) Paragraph (13) of section 101 of the Petrole 7 um Marketing Practices Act (15 U.S.C. 2801(13)), defining 8 failure, is amended by striking out subparagraph (B) and in9 serting in lieu thereof the following: I 1 2 3 2 "(B)(i) except as provided in clause (ii), any failure that a franchisor is unable to demonstrate was for a cause within the reasonable control of the franchisee, 9 10 11 12 13 14 15 16 17 18 19 20 or that "(ii) for purposes of section 102(a)(3), any failure a franchisor is able to demonstrate was for a cause not within the reasonable control of the franchis or; or "(C) for purposes of section 102(b)(2)(A) and (B), any failure of the franchisee to purchase or receive on consignment the quantity of motor fuel (by grade or in total) designated by the franchisor, unless the franchisor can demonstrate that the price and terms (including any special discounts, rebates, or similar allowances) on which the motor fuel was offered to the franchisee, during such period, reasonably enabled the franchisee to compete with comparable motor fuel marketing op erations operated under a trademark owned or controlled by a refiner.". (b) Section 101 of such Act is amended by redesignating 21 paragraphs (18) and (19) as paragraphs (20) and (21) and by 22 inserting after paragraph (17) the following new paragraphs: "(18) The term 'constructive termination' means— 23 24 25 "(A) any failure by the franchisor to make avail able to the franchisee motor fuel in an amount at least HR 2406 IH 3 1 2 equal to the minimum specified in the franchise agree ment; "(B) any failure by the franchisor to make available to its franchisee the amount of motor fuel required by subsection (a) at a price and on terms (including any special discounts, rebates, or similar allowances) which reasonably enabled the franchisee to compete with similar motor fuel marketing operations operated by, or for, or supplied by the franchisor; or "(C) any downward or upward adjustment to the quantity of motor fuel a franchisee is required or entitled to purchase or receive on consignment (by grade or in total) under a franchise agreement or as estab lished pursuant to any course of dealing unless the franchisor can demonstrate that "(i) such downward or upward adjustment is applied proportionately to all franchisees, all bulk end-user customers, and all marketing operations of the franchisor operated under a trademark or brand name owned or controlled by the same refiner which owns or controls the trademark or brand name which the franchisor has authorized the franchisee to use within the relevant geo graphic market area; or HR 2406 IH 1 2 3 4 5 6 7 8 9 10 11 121 13 14 4 "(ii) if downward adjustment is based upon the failure of the franchisee to purchase or receive on consignment a previously agreed upon amount of motor fuel during a previous period, the franchisor must demonstrate that the price and terms (including any special discounts, rebates, or similar allowances) on which the franchisor was offering to sell or consign motor fuel to the franchisee, during such period, reasonably enabled the franchisee to compete with similar motor fuel marketing operations operated by or for, or supplied by, the franchisor within the relevant geo graphic market area. "(19) The term 'similar motor fuel marketing oper 15 ations', as used in paragraph (18), means the like sale, con16 signment, or distribution of motor fuel, other than by the 17 franchisee, under the same refiner-owned or refiner-con18 trolled trademark as that which the franchisee is authorized 19 to use.". 20 21 22 23 24 (c) Section 105(c) of such Act is amended (1) by striking out "(c)" and inserting in lieu thereof "(c)(1)"; and (2) by adding the following new paragraph at the end thereof: HR 2406 IH 5 "(2) For purposes of section 101(18)(B), section 1 "(2) For 2 102(b)(2) (A) and (B), and section 102(e) of this Act, a prima 3 facie case that a franchisee is not reasonably able to compete 4 may be made by a showing by the franchisee that the differ5 ence between the price charged to the franchisee and the 6 price charged to the customer, or class of customer, for 7 whom the franchisee and the franchisor are engaged in com8 petition is less than the franchisee's cost of serving such cus9 tomer. Upon proof being shown by the franchisee establishing 10 such a prima facie case, the franchisor may rebut such pre11 sumption by a showing that its cost for the relevant functions 12 does not exceed the difference between the price charged the 13 franchisee and the price charged to the customer, or class of 14 customer, for whom the franchisor and franchisee are en15 gaged in competition.". 16 17 18 CONSTRUCTIVE TERMINATION OF FRANCHISE RELATIONSHIP; TERMINATION AND NONRENEWAL SEC. 3. (a) Subsection (a) of section 102 of the Petrole 19 um Marketing Practices Act (15 U.S.C. 2802(a)), relating to 20 termination and nonrenewal of franchise relationship, is 21 amended (1), (1) by striking out "or" at the end of paragraph (2) by striking out the period at the end of paragraph (2) and inserting in lieu thereof "; or", and HR 2406 IH |