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BACA

DEPARTMENT OF BUSINESS AND CONSUMER AFFAIRS

EMBARGO EMBARGO NOT FOR PUBLICATION. BROADCAST OR RETJ3ASE BEFORE 8.00 PM MONDAY 30 OCTOBER 1978

PETROLEUM MARKETING INDUSTRY 78/141

The Commonwealth Government is considering a package of measures in an effort to resolve the distribution and marketing problems confronting the petroleum marketing industry.

This was stated tonight by the Minister for Business and Consumer Affairs, Mr Val. Fife in an address to the Annual General Meeting of the Australian Automobile Chamber of Commerce at the Sydney Opera House.

Mr Fife outlined to the meeting the elements of measures which the Government is studying.

He emphasised that the Government had made no decision on the proposed measures and was seeking views and comments from State Governments, and all areas, of the petroleum industry, as well as interested persons and organisations.

"In the first of the measures, oil companies (that is companies or affiliated groups of companies which both refine, or have product refined for them, and also wholesale petroleum products) would be prohibited from unfairly discriminating in price between their lessee or licenced dealers," Mr Fife said.

"It is envisaged that oil companies would not be permitted to discriminate in price between their lessee or licenced dealers, except on the grounds that such discrimination is cost justified or is engaged in only to meet competition of a competitor of the oil company,

"Secondly, this prohibition on unfair price discrimination between lessee or licenced dealers would not impinge upon the freedom of oil companies to price their sales to other, independent, buyers as they wish, subject to the existing law," Mr Fife said.

"Thirdly, oil companies would be prohibited from themselves retailing petroleum through direct sales sites.

"■While it would not be envisaged that oil companies would have to divest themselves of the property of presently owned sites, if they wished to continue operating them they would have to do so through an independent lessee or licenced dealer. .

"Fourthly, lessee or licenced dealers would be given the right to obtain compensation from oil companies for an unjust termination of their lease or licence or a refusal by the oil company to renew a lease or licence. Lessee or licenced dealers would be permitted to assign their leases or licences and oil companies would be required to disclose details of site viability to

incoming lessees or licencees, "Mr Fife added.

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"In examining the elements of this possible package, the Government, has been mindful of the fact that they would complement each other. It is considered that only by adopting a comprehensive package of measures in relation to the problems being experienced in the petroleum retail industry, can the problems be properly overcome. To approach the matter in a piecemeal fashion . would only open up other possible areas of difficulty which would then have to be examined in the future.

"In giving consideration to the possible package of measures which I have just outlined, the Government' was aware of legislative moves either taken recently, or presently in contemplation, in the United States of America to bar oil companies from direct retailing. For instance, the State of Maryland requires oil companies to operate retail sites by a lessee or similar independent

dealer.

"The Government understands that to date this type of requirement has been adopted by five and is being considered by some thirty-two other States in . the United States. The constitutional validity of the Maryland law was challenged in the United States Supreme Court and the consideration being given to the law by the thirty-two other States I mentioned was dependent upon the outcome of that challenge. The United States Supreme Court has recently upheld the validity of the Maryland statute. .

"Before the Government proceeds further towards its final decision on these matters, it will be seeking views and comments on the measures I have out­ lined firom the State Governments and from all areas of the petroleum industry, including, Mr President, your Chamber and, of course, the oil companies and other interested persons and organisations.

. "If the Government decides to adopt these measures, following completion of its examination, they will be effective from today, October $0 1978»" Mr Fife said.

"The petroleum retailing industry is of critical and unique importance in Australia. The Government's prime objectives in the industry are the maintenance of effective competition and of a continuing and viable small business sector. It is determined that there be a sufficient direction of marketing practices to

ensure order and equity in the industry consistent with the maintenance of these two prime objectives."

In announcing the proposed measures Mr Fife said that the Government was determined that a solution should be found to the problems being experienced in the Petroleum Marketing Industry.

' He said that this initiative followed the Oil Industry Conference which was convened by the Government to examine how more equitable distribution and marketing policies could be developed in the industry,

"The Oil Industry Conference is comprised of representatives of all groups associated with Petroleum Marketing, and its meetings indicated the relatively little agreement between participants after three intense sessions and numerous, sub-committee meetings," Mr Fife said.

"I look forward to receiving submissions and views on the package of proposals I have outlined ftom all those who wish to make them," he said.

CANBERRA, A.C.T.

30 October, 1978