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First Circuit Finds Claims Of Gasoline Price-Fixing On Martha’s Vineyard Running On Empty

Posted  March 3, 2011

Rejecting claims of a horizontal price-fixing conspiracy, the U.S. Court of Appeals for the First Circuit has affirmed summary judgment against a class of Martha’s Vineyard residents suing gas station owners on the picturesque, emphatically low-key island that is best known as a summer colony.

The appeals court held that the plaintiffs in White v. R.M. Packer Co., Inc., failed to raise any fact question as to whether this was a case of an “agreement,” tacit or otherwise, to raise prices, or just permissible conscious parallelism.

The straightforward facts of the case could be lifted from a primer on antitrust law.   Like many other things, gas prices are high on the Vineyard – more than 56 cents per gallon higher than on Cape Cod, of which only 21 cents is attributable to higher transport costs.

Competition is also sharply limited.  There are only nine gas stations on the island, which has some 75,000 residents in the summer.  This is plenty, according to the Martha’s Vineyard Commission:  the commission hasn’t approved a permit for a new station in decades.  Gas is highly fungible, and stations post their prices for all – customers and rivals alike – to see.

Did the owners ever need to reach an “agreement” to raise prices?  While the case was “not economically implausible,” the court found the Vineyard market was “particularly conducive” to the maintenance of consciously parallel prices.  Plaintiffs failed to muster evidence that, in the words of the Supreme Court’s Monsanto decision, “tends to exclude the possibility of independent action.”  And the evidence plaintiffs did have – such as one owner, also a wholesaler, saying that if another station started “mucking around with prices one or two delivery trucks a week might not make it on the boat and they’ll get the idea real quick” – was dismissed as mere pressure from the wholesaler to his retail customer, not evidence of collusion.

Plaintiffs’ other evidence of “plus factors” simply tended to confirm what most Vineyard residents know but put up with along with the other charms of island living:  the island’s gasoline market is oligopolistic and highly conducive to parallel pricing.  Plaintiffs failed, the court found, to explain how this pricing was a function of agreement rather than independent (or interdependent) decisions by station owners.

Tagged in: Antitrust Litigation, Price Fixing,

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