The Multinational Monitor


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Multinationals Squeeze Gas Dealers

Small business people running gasoline stations on three continents are apparently facing the same problem-predatory competition by oil multinationals.

Since the Arab oil embargo, the international petroleum companies have increased their interest in the retail end of the gasoline business-a market they traditionally ignored. Analysts agree that with the OPEC nations asserting greater control over the profits at the crude oil stage, the companies have scrambled to increase their profits at the other levels of the business.

And, according to service station owners, they've done so in their usual manner. Service station operators charge that the companies are subsidizing losses at their company-owned stations to eliminate competition. And they say the companies are using unfair practices-such as arbitrary rent hikes-to drive up the costs of the lease dealers.

The result has been a drastic decline in the number of "independent" gasoline stations-those leased by small basiness people from the major companies. In England, according to the Motor Agents Association-a trade group-more than 1,300 independent retailers went out of business last year-a closure rate three times greater than that for stations directly owned by the companies. In Australia, more than 5,000 stations have closed since 1973,

In the United States, the problem has reached epidemic proportions. During the 1970s, almost 100,000 gas stations went out of business. At the same time, the company-owned stations have increased their share of the retail market from 12.7 to 25.8 percent.

Dealers in all three countries - seeing no way to realistically compete with companies that are, in effect, their landlord and supplier-have pushed for the same remedy: legislation barring the oil companies from direct operation of gas stations.

The response has been mixed. The British Office of Fair Trading concluded in October that the evidence presented by the dealers did not warrant further investigation under antitrust laws. "Indeed, in present circumstances, many of the complaints made to my office arise from the existence of competition rather than its absence," said Gordon Borrie, director general of the Office of Fair Trading.

The Department of Energy reached similar conclusions in a study of the U.S. market. But that report has been heavily criticized by Congress, other government agencies and independent analysts. Satisfied that the problem is in fact occurring, the Small Business Committee of the House of Representatives approved legislation in the past Congress to bar the oil companies from retail operations.

Dealers appear closest to success in Australia. Under heavy pressure from a politically sophisticated service station association, the conservative Fraser government has backed a series of proposals to protect the dealers from the multinationals. including forcing refiners out of the retail tail market. No final action has yet been taken, though.

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