Gas stations in my town found guilty of price fixing. Do you think it's common?

[MetroMPG]

Great. Just great. I live among a "criminal price-fixing cartel."

3 fuel companies were found guilty this week of price-fixing in 2 cities in eastern Ontario. The investigation ran from May-November 2007 (!) (in case there was any need for evidence that the wheels of justice turn slowly).

The companies were fined a total of $2-million, with Pioneer facing a $985,000 fine and Mr. Gas, which pleaded guilty to price-fixing only in Brockville, will pay a $150,000 fine. [Canadian Tire: $900,000 fine.] They will also be subject to a court order for 10 years and must educate their employees about the Competition Act, the bureau said.

How did they do it?

a bureau investigation revealed evidence that “gas retailers or their representatives in these local markets phoned each other and agreed on the price they would charge customers for gasoline”

Source: http://www.theglobeandmail.com/globe...rticle2375854/

Think this will make them clean up their act?

Think it happens where you live?

[MetroMPG]

Oh, and I have been buying gas from one of the guilty parties forever: Crappy Tire. Have been for years and years.

So much for the logic of pursuing "reward points!"

"You saved 75 cents on this fill-up... Hahaha! Your 'reward' is we grabbed an extra 4 bucks from your pocket while you weren't looking!"

[mechman600]

I'd say it's quite common. Every summer long weekend, each gas station hikes the price by the same amount, usually 10¢/L.

[user removed]

For being that stupid they deserve the fines, but in the end they will just pass the fines on to you in higher prices. They could just look at each others prices before they raised their own.

Stupid.

regards
Mech

[slowmover]

Show us an "industry" now not dominated by monoploy. Better, show us an institution (in the broadest sense of that word) not now deeply corrupt.

In the U.S. the largest retail chains account for better than 40% of sales. "Price fixing" is through the elimination of competition. Toyota and GM don't compete on price, they compete on cutting costs. And so on. Reduction of manufacturers, reduction of suppliers, reduction of transport alternatives, just run on down the list.

The little guys just want their share. And heat over gasoline prices is just another, lower level, distraction from what matters. Typical sound bite stuff.

The occasional application of the law to the unwary and unconnected is food for the idea of functioning democracy. But not at all otherwise.

.

[California98Civic]

Little stations engaged in price-fixing is irritating and illegal and should be stopped. But it is small potatoes. The global oil market has been structured as an oligopoly for decades. Corporations within an oligopolistic market don't have to break laws like this in order to defy "natural" competition dynamics or supply/demand. A limited group of companies with overwhelming dominance in terms of share of a market track each others pricing, public statements and reports, and other business actions. Then they can roughly match each others actions. The market equilibrium avoids "destructive" competition this way. They roughly follow each other in restricting capacity and myriad other actions that effect pricing. Oligopolistic markets do not have to set prices according to competition, supply, and demand as in the classical formulations. This is at least part of an explanation for why oil prices are where they are.

[jamesqf]

What's "price fixing", though? Say you run the gas station on the southeast corner of an intersection. You see the station on the northwest corner is selling for 5 cents/gal more than you, so wouldn't you be stupid not to raise your price by 4 cents? Now you call your friend who runs a station on the other end of town, and ask what his price is: is that fixing? Or if you drive by and look, instead of calling?

[euromodder]

Along my route to the motorway on the way to work, everyone charges the same ...
At 10% off the regular (gov't fixed) maximum price, I'm not really complaining - it's pretty close to the best price in the region.

It's easy to see how this could end up being called price fixing.
Everybody dips as low as the lowest competitor in order to get their fuel sold - at that price level and reduced profit margin for the stations, they need to sell a lot of fuel.

[cfg83]

MetroMPG -

You should implement an always-present "none of the above" for all polls. That said, I voted probably. I don't think you need to call anybody. If gasbuddy.com can be used to find the lowest price, why can't stations use it to shadow price? If I know there is no "competition" near me via gas buddy, I can drop my price one penny below the average and make more money.

CarloSW2

[cfg83]

jamesqf -

Originally Posted by jamesqf

What's "price fixing", though? Say you run the gas station on the southeast corner of an intersection. You see the station on the northwest corner is selling for 5 cents/gal more than you, so wouldn't you be stupid not to raise your price by 4 cents? Now you call your friend who runs a station on the other end of town, and ask what his price is: is that fixing? Or if you drive by and look, instead of calling?

I think the distinction is evidence of collusion, aka a(n e-)paper trail. You and the other party have explicitly agreed to jack the price. To get around this you could do the "wink and the nod" or simply talk to each other over coffee.

If all the gas stations in your region were owned by one entity, would you be comfortable with that scenario? If not, then I think that price fixing is a way to achieve the same result.

CarloSW2