Pumps on Martha’s Didn’t Charge Too Much for Gas

(CN) - Gas stations in affluent Martha Vineyard didn't gouge drivers at the pump in the wake of Hurricane Katrina, they just engaged in "conscious parallelism" because of gas shortages, the 1st Circuit ruled.

A group of summer and year-round residents of Martha's Vineyard joined a local real estate agency in a suit that accuses four of the island's nine gas stations, and their owners, of price-fixing and price-gouging after Hurricanes Katrina and Rita struck the Gulf Coast in 2005.

Lead plaintiff William White said the five other gas stations on the island charged about 56 cents less per gallon than the four defendants, and only 21 cents of that difference can be attributed to the extra expense of transporting fuel to the island rather than mainland Cape Cod.

A Massachusetts District Court dismissed the complaint because other stations on the cape increased their prices by a similar margin between August and September 2005. The judge found that the plaintiffs' evidence proves only that the gas stations conspired to engage in parallel pricing

White appealed this judgment, claiming the District Court failed to interpret evidence of plus factors as a whole, ignored their expert evidence, and applied the wrong legal standard.

The Boston-based federal appeals panel affirmed on Feb. 18, ruling that the motorists failed to illustrate "gross disparity" in the gas stations' pricing.

"Much of the evidence plaintiffs offer as 'plus factors,' even when viewed in the light most favorable to them, does no more than corroborate that the Martha's Vineyard gasoline market is an oligopolistic market which is highly conducive to parallel pricing," Judge Sandra Lynch wrote for the court. "The evidence does nothing to explain whether the parallel pricing was achieved by agreement or mere interdependent decisions."

The evidence brought by White's expert witness, economics professor Frank Gollop of Boston College, also fell flat, according to ruling.

"The report was adequately considered by the District Court," Lynch wrote. "It does not undermine, and in fact is consistent with, our conclusion and that of the District Court."

The panel stated that White failed to meet the legal standards for proof of violating federal antitrust laws or state laws against price-gouging with regard to the "supracompetitive prices."

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