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service stations. Instead, we are talking about a deliberate attempt to eliminate the rights of thousands of viable small businessmen, the franchised service station dealers by gaining additional control of a large percentage of the retail supply business. This legislation will protect independent dealers by providing an impartial judge, the court, to determine the fairness of major oil company decisions regarding lease terminations.

The dealer-day-in-court concept is certainly not new. It has been needed for the last 5 years, and it is now apparent that unless this protection is provided quickly it may simply come too late.

I believe this takeover attempt is a real one and is specifically illustrated by the drastic reduction of tank wagon prices for affiliated retail outlets. There is no doubt that this practice places an unmanageable burden on branded retail outlets selling the same product and who are also required to meet stringent additional lease arrangements. Certainly when branded dealers are forced to pay a price equivalent or nearly so to the retail selling price of their supplier's secondary brand, they cannot continue to survive. Please do not misunderstand me. I am not advocating that all gasoline be sold at the same price. I am just saying that I believe this illustrates that the problem is a real one, and if current practices continue it could lead to the demise of the largest segment of the gasoline retailing industry. This would be truly unfortunate because the various tastes of the consuming public demand different types of services. While some consumers wish complete, high-cost, full-time services which includes the most modern diagnostic equipment, others prefer the quick and economical self-service units. However, the vast majority of users still fall into the middle category of the full-service conventional station which can provide minimal mechanical help and traditional gasoline service functions.

And this is certainly the area which will feel the full impact of this pending legislation. The National Congress of Petroleum Dealers has indicated that more than 60 percent of service work done on automobiles is performed by these types of stations. Therefore, it is clear, the interests of these dealers is of vital importance to our neighborhoods and our economy.

Now, turning to specific provisions of the pending legislation, I would like to express my support for testimony offered previously and apparently under active consideration and review by this committee. One is for modification of definitions and language to distinguish between oil jobbers and major oil company refiners. After much study regarding this issue, I believe that all oil jobbers should not be subject to the same specific liabilities as major refiners and that there should be some price margin protection for the services they perform.

I represent an area in which jobbers are plentiful mainly because major oil companies have not found it economical to invest in rural areas. Jobbers provide the capital investment and therefore provide the outlet for a small businessman with little or no capital. To subject jobbers to the same liability requirements as major oil companies would certainly stifle their willingness to make such an investment. Therefore, I would like to ask the committee to attempt to define Jobbers in such a manner that this small business interest will also have protection.

I also believe that the definition of refiner as used in section 201 might need to be more strictly defined so some small refiners who are almost in the same positions as jobbers will not be so severely restricted.

I have serious reservations concerning the 2-year limitation in section 202 regarding the moratorium on refiner operated retail outlets.

I would certainly ask that the committee restudy this limitation and urge, as Senator Moss did earlier, that the freeze be effective at least until the Federal Trade Commission has issued rules as a result of the proposed study under section 204 of H.R. 13000.

Please let me add that I particularly like the change to volume under section 201 for determining the percentage of refiners' gasoline distribution rather than number of stations, although I have some concern about subsection (2) of section 202 regarding the national average percentage, which I believe might increase take-overs by some refiners in an effort to avoid possible implications of future legislation in this area.

And I support the octane and study provisions of H.R. 13000 and add my support for its passage this session.

I would simply like to add, Mr. Chairman, that I am deeply concerned about this legislation. I visited at many times and had mass meetings with dealers in my district. I was upset, irritated, and a bit ill finding these major oil companies spending millions telling the American people to slow down, drive less, use less fuel; they are spending our money to get people to use less of their products when they threaten dealers they were going to terminate the lease if they did not sell more gas. This is disturbing. That is the reason I took an interest in this kind of legislation. I urge this committee to move forward with some kind of reasonable responsible legislation.

Mr. DINGELL. Thank you for your appearance and your very helpful testimony. We appreciate the time and effort that went into the presentation and preparation of your testimony. May I ask you this question: Is protection against predatory pricing a necessary adjunct to protection of the franchise relationship?

Mr. LITTON. I would not think that necessary, not necessary to it; no.

Mr. DINGELL. Very good.

This Chair does thank you. We are grateful to you. We thank you. Mr. LITTON. Thank you very much."

Mr. DINGELL. The next witness is Mr. Kenneth Curtis, vice president of marketing for Standard Oil of Indiana.

Mr. Curtis, will you please come forward. If you would, Mr. Curtis, for the record, please identify both yourself and your associate to assist our reporter.

STATEMENT OF KENNETH E. CURTIS, VICE PRESIDENT OF MARKETING, STANDARD OIL OF INDIANA (AMOCO), ACCOMPANIED BY M. J. KEATING, ASSISTANT GENERAL COUNSEL

Mr. CURTIS. Good afternoon, Mr. Chairman and members of the committee. I am Kenneth E. Curtis, vice president of marketing for

Amoco, Standard Oil of Indiana; and with me is M. J. Keating, assistant general counsel for Amoco.

Mr. DINGELL. The Chair thanks you for appearing. You were requested specifically to be with us as part of a panel with two other companies. The other two companies elected not to appear. You and your company have decided to appear, and I express my thanks to you for being here. I am aware of the reluctance of the industry to appear on panels. We do not always agree with industry, but we at least try to cooperate.

Mr. CURTIS. We appreciate the opportunity to be here, Mr. Chairman and we are willing to testify under the rules you established.

Mr. DINGELL. I want to express my particular thanks. I do not like to force people to appear on a panel, but when we have a lot of witnesses to be heard, that is about the only way we can complete the legislative work that we have. I am at this moment functioning reluctantly while the House is in session. You may consider yourself recognized.

Mr. CURTIS. I appreciate this opportunity to present my views and those of my company on H.R. 13000. We at Amoco feel that our more than 12,000 dealer-operated stations and our nearly 12,000 additional jobber-supplied stations together with our more than 5 million active credit card accounts give us a good deal of insight into the whole range of marketing and customer relations.

I am aware that various industry groups have testified, including the National Congress of Petroleum Retailers. Also I know that this organization speaks for a large number of dealers throughout the United States. However, I think it is important for the committee to note that they do not represent the views of many Amoco dealers. At this time, with your permission, I would like to submit to the committee the testimony of over 60 Amoco dealers and ask that it be made a part of the record.

Mr. DINGELL. Without objection, the testimony referred to will be inserted in the record at the appropriate place.1

Mr. DINGELL. Those two lights, and the buzzers you just heard, say there is a vote on the floor. In 15 minutes I can run over and answer and come back. Would that be offensive to you?

Mr. CURTIS. We will be here when you return.

Mr. DINGELL. I hate to ask you to do this, but there are certain reasons why it is prudent for me to answer those votes.

The committee will stand in recess for about 15 minutes. [Brief recess.]

Mr. DINGELL. The subcommittee will come to order. At the time of the recess, Mr. Curtis was testifying. We will be glad to recognize you again, Mr. Curtis.

Mr. CURTIS. First, I appreciate the committee's accepting the testimony of the Amoco dealers. I will not attempt to summarize their testimony except to say that I think, generally, they feel a real concern that this legislation might have an opposite effect on their relationship with their supplier and, at this time, I would ask all the Amoco dealers who are here-I am pretty proud of them-to stand

up.

1 The material referred to may be found in the committee files.

Thank you, gentlemen.

Mr. DINGELL. This is a whole body of Amoco dealers.

Mr. CURTIS. I am sure that any of them would be glad to answer any questions that the committee would have.

Mr. DINGELL. Who is taking care of the store?

Gentlemen, we are pleased that you are with us and we are happy to welcome you.

Mr. CURTIS. In accordance with your invitation of April 26, 1976, we have submitted to the subcommittee our written statement on H.R. 13000, which is referred to as the Petroleum Marketing Practices Act. At this time, at the request of the subcommittee, I will limit my opening statement to 10 minutes and focus on the highlights of four aspects of the acts. Those main points are:

One: The franchise provisions of the bill.

Two: The moratorium on refiner-operated service stations.
Three: The restrictions on pricing gasoline.

Four: The requirements that octane ratings for gasoline be posted on the dispensing pump.

I would first like to address my comments to the requirement that octane ratings for gasoline be posted on the dispensing pump. While this is probably the least controversial provision of the act, it does in my judgment serve to illustrate some of the flaws of other sections of the pending legislation.

In the first place, such a posting requirement is unwise, and perhaps even deceptive to the consumer because the octane rating is only one of a number of factors in the overall determination of gasoline quality. The quality requirements for use in a new automobile include many things in addition to gasoline. Automobile manufacturers are concerned with emission standards, fuel consumption, and a host of other technical problems. The ASTM, SAE, and API have devoted a lot of effort to perfect a broader system of descriptive gasoline ratings which will be more meaningful and useful to the motoring public.

In the second place, the Federal Energy Administration has been requiring the posting of octane ratings for over 3 years.

Therefore, as I have stated, while the octane posting requirements in this legislation are not very controversial, their inclusion does demonstrate some of the duplication, the contradictory, and unnecessary features of other parts of the bill.

With respect to the franchise protection section of H.R. 13000, I can say that we oppose it because it interrupts thousands of long understood and mutually satisfactory agreements to give one side certain new privileges without conferring any compensating benefits on the other side. We believe that if this type of legislation should be passed, it should affect both sides equally-meaning that franchises could not disengage from the contractual relationships except on grounds similar to those imposed on franchisors. This, in our judgment, is the only fair approach.

We wonder, however, if those who endorse this bill would favor their own inclusion in it on an equal basis. If they would not, their insistence on a one-way street of special privilege would highlight the proposal's shortcomings.

Second. The provision that lease clauses can only be enforced if they are reasonable, and that changes at time of renewal must also be reasonable, opens up myriad uncertainties, with the prospect of repetitious and lengthy litigation to find answers. If any such provision is to be commenced, it should be patterned after the Uniform Commercial Code, which merely imposes a standard that clauses must be conscionable.

Third. Conferring such one-sided benefits on franchisees and such one-sided disadvantages on franchisors, the bill fails to take into consideration the practicalities of day-to-day human affairs. There is nothing any company wants more than honest and reliable franchisees representing its goods and services to the public. These make up the vast majority of all and are in no danger of sudden cancellations or summary dismissals.

In fact, the companies often go to great lengths to help all their franchisees develop the practices and policies that will enable them to succeed in a highly competitive business environment. When it becomes necessary for a company to cancel a franchise, that cancellation is almost invariably due to such causes as credit failure, customer fraud, product mix, station abandonment, and the like.

The bill does not specifically recognize any of the four grounds I have just mentioned as cause for termination or nonrenewal. We believe that any bill of this type should expressly recognize them and a series of similar grounds as cause.

In all such cases, 90-day notices, which the bill would require, are of advantage to the unfit and dishonest operator-not the company and certainly not the other dealers for the consumer.

We also see no merit in the provision of the bill that after 180 days causes for severance are waived. A supplier may be willing to give its francisees another chance or chances on a probationary basis, but this would be a course risky under this bill.

At Amoco, we don't oppose this bill because it makes it difficult for us to get rid of good dealers, but because it will make it impossible for us to protect ourselves, the public, and the good name of other dealers.

I would like to note at this point, Mr. Chairman, some of the aspects of Amoco's own policy and procedures for handling difficulties arising between the company and our dealers. In the first place, I should stress that each of our dealers represents a considerable investment on the part of our shareholders, as well as on the parts of the dealers themselves. Our typical dealership requires an investment of $200,000 of which $25,000 is put up by the dealer himself.

To make this investment work for both of us, Amoco has an extensive dealer and dealer-assistant training program in which we school our future personnel in the problems they will encounter in operating their own businesses. In 1975, we trained 590 new dealers and these together with the existing pool of 11,000 Amoco trained dealers including 4,059 service specialists-comprise our independent dealerships.

Together with this training we have what we consider one of the most forward looking dealer policies in the industry. A copy of our dealer policy statement is enclosed with this report. This statement

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