FOR YOUR INFORMATION........................March 7, 1990



     The Federal Trade Commission staff has commented on a Virginia
bill that would prohibit petroleum refiners from owning and
operating retail motor fuel stations, expanding hours of operation
by their franchised or leased service stations, and enforcing
franchise performance requirements for brand-name product purchase
and resale.

     The Commission staff comments are in response to a request
from Virginia Delegate Alan A. Diamonstein, Chairman of the House
General Laws Commmittee.  In a letter to Del. Diamonstein, staff
says it believes that S.B. 235 "may lessen competition among motor
fuel dealers and raise gasoline and diesel prices to Virginia
consumers and visitors."

     The bill would prohibit refiners from operating new retail
motor fuel stations, or from leasing stations after January 1,
1991, and would restrict the rights of refiners to terminate or
fail to renew franchise agreements with existing retail gasoline
dealers.  The legislation is intended to protect dealers from
allegedly anticompetitive activity by their suppliers.

     The staff letter says that fears of such anticompetitive
activity are unfounded.  The letter notes that studies of
competition in the gasoline market since 1981 have found "that
gasoline dealers have not been and are not likely to become targets
of anticompetitive practices by their suppliers."  

     The FTC staff concludes that the proposed gasoline divorcement
bill "would tend to insulate lessee-dealers from competition by
potential entrants and by expansion of the existing refiner-
operated networks" therefore causing "higher motor fuel prices and
fewer choices for Virginia consumers and visitors."

     The letter represents the views of the FTC's Bureau of
Competition and does not necessarily reflect the views of the
Commission or any individual Commissioner.


                             (More)
opies of the letter are available from the FTC's Public
Reference Branch, Room 130, 6th St. and Pennsylvania Ave., N.W.,
Washington, D.C.  20580; 202-326-2222; TTY  202-326-2502.

                              # # #

MEDIA CONTACT:      Brenda A. Mack, Office of Public Affairs,
                    202-326-2182

STAFF CONTACT:      Ronald B. Rowe, Bureau of Competition,
                    202-326-2610


(VA-GAS)