Tuesday, February 06, 2007

Predatory Pricing, Price Gouging, or Price Fixing?

I thought we were mostly worried about high gas prices, but in Colorado, a court ruled that prices at some gas stations were TOO LOW, and those gas stations were accused of "predatory pricing":

"After a price war among several gas stations forced retail gas prices in Montrose, Colorado below wholesale cost in January 2005, several stations filed a lawsuit that asked the court to stop a competitor's program of giving a 7-cents-per-gallon gas discount to shoppers who purchased more than $100 in groceries over a 30-day period, citing the Colorado Unfair Practices Act in their case."

In Florida, politicians are worried that gas prices are TOO HIGH, and want to stop "price gouging":

"Florida Agriculture and Consumer Services Commissioner Charles H. Bronson today urged state residents to report any instances of price-gouging in the wake of the tornadoes that tore through four Central Florida counties overnight. Under Florida law, it is unlawful to charge exorbitant or excessive prices for essential items -- including shelter, gasoline, food, water, ice, generators or lumber."

And
in Ohio, politicians are worried about "price fixing" and collusion.

Bottom Line: In the topsy-turvy world of politics and anti-trust law, you can get in trouble as a gas station owner for almost any price you charge. If politicians or courts think your prices are too low, you can be accused of predatory pricing; if your prices are too high, you'll be charged with price gouging; and if your prices are the same as your competitors, you can be charged with price-fixing or collusion.

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