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Arco Wins Suit Over Predatory Pricing of Retail Gas in Las Vegas

December 01, 1998|From Bloomberg News

Atlantic Richfield Corp. triumphed Monday in an antitrust lawsuit that accused the seventh-largest U.S. oil company of using predatory pricing to eliminate competition in the retail gasoline business in Las Vegas.

The U.S. Supreme Court rejected a last-ditch appeal by Rebel Oil Co. and Auto Flite Oil Co., two competitors that alleged that Arco dropped its Las Vegas gas prices below competitive levels from 1986 to 1989. The smaller companies say many other retailers then fled the market, allowing Los Angeles-based Arco to jack up its prices in later years.

By rejecting the case, the high court left intact a lower court ruling that sets a high bar for plaintiffs trying to prove predatory pricing.

The U.S. 9th Circuit Court of Appeals, based in San Francisco, threw out the lawsuit in a 3-0 decision. The court said Rebel and Auto Flite failed to prove a key element of predatory pricing--that Arco sold gas at prices below its production costs.

Rebel and Auto Flite, affiliated companies that sell gasoline at retail and wholesale in Las Vegas, appealed to the Supreme Court, arguing that the lower court unfairly penalized them for Arco's refusal to turn over data showing its costs.

The companies instead used a variety of other means in an attempt to show that Arco illegally underpriced its gasoline. Arco argued a predatory pricing lawsuit can't succeed without hard cost evidence. The appellate court agreed, saying Rebel and Auto Flite can't "substitute a market price for Arco's actual costs."

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