PRINTER'S NO. 2853
No. 2125 Session of 2003
INTRODUCED BY O'BRIEN, ARMSTRONG, THOMAS, WATSON, HERMAN,
BROWNE, HARHAI, WALKO, JOSEPHS, WOJNAROSKI, SATHER, MICOZZIE,
YOUNGBLOOD, KENNEY, DeLUCA, HENNESSEY, TIGUE, FREEMAN,
HORSEY, CLYMER AND MELIO, OCTOBER 27, 2003
REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, OCTOBER 27, 2003
AN ACT
1 Amending the act of November 26, 1975 (P.L.454, No.126),
2 entitled "An act regulating the practices of suppliers,
3 distributors and dealers of gasoline, petroleum products and
4 accessories for motor vehicles and providing remedies for
5 violations," further providing for legislative findings and
6 purposes; adding definitions; further providing for
7 prohibited practices and for penalties and enforcement.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 Section 1. Sections 1, 2 and 4 of the act of November 26,
11 1975 (P.L.454, No.126), referred to as the Gasoline, Petroleum
12 Products and Motor Vehicle Accessories Act, are amended to read:
13 Section 1. Legislative Findings and Purposes.--(a) The
14 General Assembly of this Commonwealth finds and declares that
15 the distribution and sales of gasoline and petroleum products in
16 the Commonwealth of Pennsylvania, including the rights and
17 obligations of suppliers and dealers, vitally affects its
18 general economy. In order to promote the public interest and
19 public welfare of this Commonwealth; to avoid undue control of
1 the dealer by suppliers; to foster and keep alive vigorous and
2 healthy competition for the benefit of the public by prohibiting
3 practices through which fair and honest competition is destroyed
4 or prevented; to promote the public safety; to prevent
5 deterioration of facilities for servicing motor vehicles on the
6 highways of this Commonwealth; and to prevent dealers from
7 unnecessarily going out of business, thereby resulting in
8 unemployment with loss of tax revenue to the Commonwealth and
9 its inevitable train of undesirable consequences; it is
10 necessary to legislate standards pursuant to the exercise of the
11 police power of this Commonwealth governing the relationship
12 between suppliers and distributors of gasoline and petroleum
13 products and the dealers who sell the products to the public.
14 (b) The General Assembly finds that:
15 (1) The preservation of independent and small dealers and
16 distributors of motor fuel is essential to the preservation of a
17 healthy and competitive motor fuel marketplace. Such a
18 marketplace, in an industry that affects the life of virtually
19 every resident of this Commonwealth on a daily basis, is
20 essential to the health, safety and economic well-being of the
21 public.
22 (2) Independent dealers and distributors are threatened by
23 practices such as unfair wholesale pricing of motor fuel by
24 refiners and others, and other costs imposed upon such dealers
25 and distributors, all of which serve to increase the price of
26 motor fuel to the consumer. Refiners often impose charges upon
27 such dealers and facilities, that are not applied to a company-
28 operated facility, a tactic that serves to drive out locally
29 owned and operated businesses in favor of locations operated by
30 multinational refiners.
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1 (3) Such practices are inherently destructive of these
2 competitors and therefor injure competition.
3 (4) Preservation of the dealers and distributors assures the
4 greatest number of competitors able to invigorate competition
5 among themselves, and assures consumers of the widest variety of
6 goods and services available at motor fuel marketing facilities,
7 as well as greater responsiveness to local market conditions.
8 (5) Displacement of dealers and distributors by refiner-
9 operated facilities is contrary to interests of the citizens of
10 Pennsylvania.
11 Section 2. Definitions.--The following words and phrases
12 when used in this act shall have, unless the context clearly
13 indicates otherwise, the meanings given to them in this section:
14 "Agreement." A contract or lease, or combination of both, or
15 any other terminology used to describe the contractual
16 relationship between the lessor supplier and the lessee dealer.
17 "Imposed charges." Any charge that is imposed upon a
18 retailer by the refiner or distributor supplying motor fuel to
19 the station in question. The term includes charges such as
20 station rent, maintenance charges and any other charge that is
21 within the reasonable control of the refiner or distributor.
22 "Lessee dealer." Any person, firm, corporation or
23 association who leases from and enters into an agreement with a
24 lessor supplier for the purpose of operating a gasoline service
25 station.
26 "Lessor supplier." Any person, firm, corporation or
27 association, resident or non-resident, who leases real estate
28 and the improvements thereon for use as a gasoline service
29 station and who also enters into an agreement with a lessee
30 dealer to supply the lessee dealer with gasoline, petroleum
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1 products and accessories necessary to the proper operation of a
2 motor vehicle.
3 "Wholesale price." The tankwagon price or other price
4 charged to a motor fuel retailer or the rack price charged to a
5 distributor.
6 Section 4. Prohibited Practices.--(a) It shall be a
7 violation of this act for any lessor supplier, directly or
8 indirectly, through any officer, agent or employee to engage in
9 the following practices:
10 (1) To require a lessee dealer at the time of entering into
11 an agreement to assent to a release, assignment, novation,
12 waiver or estoppel which would relieve any person from liability
13 imposed by this act.
14 (2) To prohibit, directly or indirectly, the right of free
15 association among lessee dealers for any lawful purpose.
16 (3) To prohibit the transfer by will of the gasoline service
17 station business and the right of the lessee dealer under the
18 agreement to a spouse, child or children.
19 (4) To require a lessee dealer to accept a lease for the
20 premises of a term less than one year.
21 (5) To provide any term or condition in any lease or other
22 agreement which term or condition directly or indirectly
23 violates this act.
24 (b) It shall be a violation of this act for any refiner or
25 distributor or any affiliate or subsidiary thereof, as the case
26 may be, to charge any retailer a wholesale price that fails to
27 comply with the prohibitions of this section. The following
28 actions are hereby defined to constitute unfair wholesale
29 pricing practices:
30 (1) Charging a wholesale price that is equal to or greater
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1 than the lowest retail price charged by such refiner or
2 distributor at a station operated by employees, commission
3 agents or other contractual arrangement that allows the refiner
4 or distributor to set the ultimate retail price, where such
5 station is served out of the same terminal as the station of the
6 complaining retailer, less imposed costs as defined in section
7 2.
8 (2) Charging a different wholesale price to retailers served
9 out of the same terminal, unless such difference in price is due
10 to cost differentials incurred in serving such retailers.
11 (3) Discriminating in price between customers served out of
12 a terminal who are in different classes of trade, unless such
13 discrimination is based upon:
14 (i) cost differentials incurred in serving such customers;
15 (ii) a price discrimination is made in good faith to meet
16 the price of a competitor who is selling a motor fuel of like
17 grade and quality, and provided further, that such price
18 differential is made available to all customers; or
19 (iii) cost savings that are due to the functions performed
20 by such customer.
21 (4) Any contract provision or action by a franchisor that
22 has the practical effect of determining a franchisee's retail
23 price or price level shall be conclusively presumed to violate
24 this act.
25 (c) Every franchise agreement in this Commonwealth shall
26 contain the following language in bold face print of not less
27 than 12-point type:
28 "The franchisee is an independent businessperson, and the
29 determination of a retail price shall be made by such
30 businessperson, and such businessperson alone."
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1 Section 2. The act is amended by adding a section to read:
2 Section 6.1. Penalties, Enforcement.--(a) Any party found
3 to have violated the provisions of this act shall pay a civil
4 penalty of not less than $10,000 per day, per location for each
5 day such violation is found to have occurred.
6 (b) An action to enforce this act may be brought in a court
7 of competent jurisdiction by any affected party, as well as the
8 Attorney General of the Commonwealth, the attorney for any
9 subdivision within this Commonwealth or a trade association.
10 (c) In any action under this act, the court shall order such
11 equitable relief as the court determines is necessary to remedy
12 the effects of any requirement or prohibition contained in this
13 act, including declaratory judgment, mandatory or prohibitive
14 injunctive relief and interim equitable relief. In any action
15 under this act, the court shall grant a preliminary injunction
16 if the complaining party shows:
17 (i) that a violation or threatened violation of this act
18 exists;
19 (ii) that serious questions making fair ground for
20 litigation exist with respect to the merits of the claim; and
21 (iii) that on balance the hardships imposed upon the motor
22 fuel supplier will be less than hardships imposed upon the
23 complaining party if such preliminary injunctive relief were not
24 granted.
25 (d) Any party found to have violated the provisions of this
26 act as a result of an action brought pursuant to subsection (b)
27 shall be liable for:
28 (1) three times the actual damages sustained by the
29 complaining party;
30 (2) in the case of a willful violation of any provision of
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1 this act, exemplary or special damages; and
2 (3) reasonable attorney and expert witness fees as well as
3 all costs of the action incurred by the complaining party.
4 (e) Rights and obligations under this act may not be waived.
5 (f) This act shall be liberally construed in order to carry
6 out its remedial purposes.
7 Section 3. This act shall take effect in 60 days.
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