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Positions:  Prohibiting Predatory Pricing of Motor Fuels

S.4522-A by Senator Nozzolio
AN ACT to amend the General Business Law and the Executive Law, in relation to enacting the "New York Motor Fuel Marketing Practices Act"

This legislation is aimed at preserving healthy competition in the motor fuel marketplace by prohibiting the sale of gasoline at predatory prices.

The New York Association of Convenience Stores represents nearly 4,000 retail locations from Rochester to Riverhead that sell motor fuels, many of them family-run, independent businesses. Collectively they serve about 3½ million customers per day.

As in other states, large-scale retailers are entering New York's motor fuel marketplace offering pump prices so low they fall below the wholesale price paid by neighboring independent convenience stores and gas stations to their suppliers. That is not fair competition.
Allowed to persist, below-cost pricing by "big-box stores" and other chain retailers will eventually starve independents by either siphoning away their volume or forcing them to reduce their retail prices to a level that is unprofitable.

Below-cost pricing is an enticing mirage the consumer can't resist. In the long term, as independents are squeezed out of the picture, the consumer ultimately will have fewer choices, giving the few dominant retailers that remain carte blanche to charge whatever the market will bear.

There are those in our membership who believe strongly that the marketplace - not government - should regulate pump prices. All things being equal, NYACS shares that philosophy. But when certain competitors deliberately disrupt the marketplace by recklessly engaging in pricing practices designed to injure competition, a mechanism for intervention such as that prescribed by S.4522-A becomes necessary.

In the interest of protecting the independent petroleum marketer from predatory pricing, thereby promoting healthy competition, NYACS respectfully urges passage of this legislation.

June 12, 2001

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