Marathon Petroleum asks judge to dismiss Jack Conway's gas prices lawsuit
LOUISVILLE, Ky. (WDRB) -- Marathon Petroleum Co. says Kentucky Attorney General Jack Conway offers no facts backing up his lawsuit alleging anti-competitive behavior by the company resulting in higher gas prices in Louisville and Northern Kentucky.
“For all its rhetoric, the Attorney General’s (lawsuit) fails to allege any unlawful conduct by defendant Marathon,” the company said in a court document filed Wednesday.
Marathon has asked U.S. District Court Judge David Hale to dismiss the lawsuit. It's the company's first formal response to Conway’s complaint, which was first filed May 12 and refiled last month.
Conway alleges that Marathon, based in Findlay, Ohio, has illegally restricted competition in the market for reformulated gas, the cleaner-burning blend required in the Louisville and Northern Kentucky areas during the summer because of air regulations.
Marathon is believed to be the primary supplier of gas to the state. According to Conway, Marathon supplies 90 to 95 percent of the reformulated gas sold in Louisville and Northern Kentucky.
Marathon’s unlawful conduct has resulted in gas prices that are roughly 40 cents higher per gallon in Louisville than in St. Louis – a similar market where reformulated gas is also required, according to Conway’s lawsuit.
Conway points to “exchange agreements” by which Marathon – which owns the only refinery in Kentucky – supplies reformulated gas to competitors BP, Shell and ExxonMobil for sale in Louisville and Northern Kentucky. (The identities of BP, Shell and ExxonMobil are blacked out in Conway’s lawsuit but not in Marathon’s response).
But agreements allowing refiners to swap gas supplies in their respective geographic areas actually promote competition, Marathon said.
“By supplying (reformulated gas) for use by these competitors in Louisville and Northern Kentucky, the exchange agreements enable ExxonMobil, Shell and BP to compete more effectively than they might be able to in their absence,” according to the court filing.
Conway also presented a handful of examples in which Marathon has sold former gas station properties with deed restrictions forbidding future owners from using the real estate as a gas station.
But Conway offers no evidence that “any significant portion” of the real estate in Louisville and Northern Kentucky is subject to those restrictions, Marathon said.
“Common sense indicates that there are numerous properties in the Louisville metropolitan and Northern Kentucky regions that are suitable for gas stations,” according to the filing.
Conway also said Marathon has contracts with retailers (Kroger and Swifty, according to Marathon’s response) requiring the retailers to buy a certain amount of gas from Marathon or face penalties, thus “limit(ing) the retailers’ ability to obtain gasoline from Marathon’s competitors.”
Marathon said the supply contracts Conway cites are from 2008 and thus too old to challenge.
Even so, Conway alleges that the retailers agreed only to buy a certain amount of gas from Marathon or face “modest” penalties – not that the contracts prevented the retailers from buying gas from other suppliers, according to Marathon.
Marathon’s response attacks Conway’s allegations while revealing little about the company’s operations. Marathon is silent, for example, on Conway’s assertion that it has at least 90 percent of the market for reformulated gas in Louisville and Northern Kentucky.
But, in summarizing a 2004 opinion in a different case, Marathon said: “There is nothing unlawful about possessing a monopoly, or attempting to acquire a monopolistic share of the market, through free market competition.”
Asked for a response to Marathon's filing, Attorney General's office spokeswoman Allison Martin said: "The facts speak for themselves and are clearly outlined in our complaint.”
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