which is calculated by dividing Exxon's total available supply of gasoline for that month by the total base period volume of all those Exxon is obligated to supply. Plaintiffs admit that they are receiving all the gasoline which they are permitted to receive under the FEO regulations. However, they contend that the opening of the new station, with its new allocation of gasoline, will increase the total base period volume of Exxon's customers thereby slightly reducing Exxon's monthly allocation percentage. This would result in a very small reduction in the amount of gasoline which all Exxon-supplied stations, including plaintiffs, would receive. However, it is clear that the effect of the allocation to the new car wash on plaintiffs' monthly allocation is de minimis. Plaintiffs claim, however, that Exxon will supply this new company-operated station with a large amount of gasoline that otherwise would have been allocated equally among the plaintiffs and all other Exxon customers and that this constitutes an illegal refusal to deal.
A refusal to deal becomes illegal under the Sherman Act only when it produces an unreasonable restraint of trade. Ace Beer Distributors, Inc. v. Kohn, Inc., 6 Cir. 1963, 318 F.2d 283, cert. denied, 1963, 375 U.S. 922, 84 S. Ct. 267, 11 L. Ed. 2d 166. A mere refusal to deal, without more, is not a Sherman Act violation. United States v. Colgate & Co., 1919, 250 U.S. 300, 63 L. Ed. 992, 39 S. Ct. 465; GAF Corp. v. Circle Floor Co., Inc., S.D.N.Y. 1971, 329 F. Supp. 823, aff'd 2 Cir. 1972, 463 F.2d 752. Plaintiffs contend that there is a refusal to deal in furtherance of an unreasonable restraint of trade.
Plaintiffs base their allegation on the following theory. Exxon's refusal to deal with plaintiffs and its other retail outlets has enabled Exxon to supply the new car wash with an unduly large amount of gasoline, far in excess of the fuel supplies available to plaintiffs and all other Exxon outlets in the Lemoyne-New Cumberland-Lower Allen-Highland Park communities, the alleged relevant market for the new car wash. This superior supply of motor fuel will enable the new station to sell virtually unlimited amounts of gasoline to all customers and to stay open much longer hours than plaintiffs. This will result in many of plaintiffs' regular customers patronizing the new station, particularly those with Exxon credit cards.
The new station's competitive advantage arising from its superior supply will irreparably damage the plaintiffs in that it will interrupt the routinized buying behavior of plaintiffs' regular customers, thereby destroying the good will developed by Quigley and Uber over a long period of time. In short, Exxon's refusal to deal has enabled it to so supply its new station that it will have an unfair competitive advantage over all other Exxon stations, including plaintiffs', in the market in which it will compete. This is the unreasonable restraint of trade which plaintiffs allege.
The Supreme Court has designated certain classes of combinations as illegal per se, and their mere existence constitutes a Section 1 violation without any reference to market effect. Restraints which are deemed unreasonable per se are horizontal price fixing, United States v. Socony-Vacuum Oil Co., 1940, 310 U.S. 150, 84 L. Ed. 1129, 60 S. Ct. 811; resale price maintenance, Dr. Miles Medical Co. v. John D. Park & Sons Co., 1911, 220 U.S. 373, 55 L. Ed. 502, 31 S. Ct. 376; division of markets, United States v. Topco Associates, Inc., 1972, 405 U.S. 596, 31 L. Ed. 2d 515, 92 S. Ct. 1126; group boycotts, Klor's, Inc. v. Broadway-Hale Stores, Inc., 1959, 359 U.S. 207, 3 L. Ed. 2d 741, 79 S. Ct. 705; United States v. General Motors Corp., 1966, 384 U.S. 127, 16 L. Ed. 2d 415, 86 S. Ct. 1321; tying arrangements, International Salt Co. v. United States, 1947, 332 U.S. 392, 92 L. Ed. 20, 68 S. Ct. 12; Fortner Enterprises, Inc. v. U.S. Steel Corp., 1969, 394 U.S. 495, 22 L. Ed. 2d 495, 89 S. Ct. 1252; and reciprocal dealing, United States v. Griffith, 1948, 334 U.S. 100, 92 L. Ed. 1236, 68 S. Ct. 941. A refusal to deal which is in furtherance of one of these illegal objectives is itself a per se violation of the Sherman Act. Interphoto Corp. v. Minolta Corp., S.D.N.Y. 1969, 295 F. Supp. 711, aff'd 2 Cir. 1969, 417 F.2d 621. The alleged restraint of trade in the instant case clearly does not fall within any of the unreasonable per se categories. Therefore, the alleged restraint of trade must be evaluated with respect to its market impact since only those which unreasonably restrain competition in a particular market are proscribed. United States v. Arnold, Schwinn & Co., 1967, 388 U.S. 365, 18 L. Ed. 2d 1249, 87 S. Ct. 1856.
After careful analysis of the evidence adduced at the trial, the court is firmly convinced that the opening of the new station with its proposed supply of gasoline will not constitute a restraint of trade of any kind. Plaintiffs have failed to prove that the opening of the new station will have any adverse effect on their competitive position in the market. Given the completely different flow of traffic past each of the three stations,
the court is not convinced that plaintiffs' stations and the new Exxon station are competitors in the same geographical market. Moreover, even assuming that the three stations compete in the same market, the underlying basis for plaintiffs' claim -- that the large supply of gasoline allotted to the new car wash will enable the new station to stay open longer hours and make unlimited sales -- is not supported by the record. If Exxon's estimate of sales volume for the new car wash is reliable, the new station's allotment of gasoline based on a 1972 estimated sales volume, as required by FEO regulations, is substantially less than the amount the new station could sell if given an unlimited supply. Therefore, the new car wash also may have to limit its hours of operation, at least in regard to the sale of gasoline. It is not the quantity of motor fuel itself but the amount supplied in relation to consumer demand at any particular station that determines how long one can stay open without running short of gasoline. In recognition of this fact, FEO regulations do not require that all stations be supplied with the same quantity of gasoline but that all stations be supplied with the same fraction of their 1972 sales volume.
The court finds that Exxon's estimated sales volume for the new station, which was calculated in accordance with marketing criteria and techniques developed and successfully utilized by Exxon in the past, is reasonable and hence the proposed base year gallonage for the new station is not excessive. Past performance by new car wash stations opened by Exxon support the reliability of the methods used in estimating the sales volume for the new station.
Plaintiffs clearly have failed to prove that the new car wash will be able to stay open longer than plaintiffs or that it will be able to make unlimited sales at times when plaintiffs cannot.
Moreover, even if the new car wash were to stay open longer hours and sell unlimited amounts of motor fuel, plaintiffs have failed to demonstrate how this would restrain trade. There is no allegation and certainly no evidence that Exxon through its new station is attempting to monopolize the retail sale and distribution of its gasoline in the market in which the new car wash will compete. Indeed, the court has concluded that the opening of the new station is likely to increase competition in the market in which it will compete by making available to consumers an additional supply of motor fuel at a time when there still is a shortage in the market. Plaintiffs are in a poor position to complain about new competition when the evidence establishes that the prices they have been charging for gasoline are substantially higher than legally permissible under FEO regulations.
In addition, plaintiffs admit that they presently are able to sell all the gasoline they receive under the FEO regulations and that after the new car wash opens they will still be able to sell all the motor fuel they presently receive under the mandatory allocation program.
For all of the foregoing reasons, plaintiffs' contention that "the greater supply of gasoline which the new station will have will restrain trade by enabling the new station to operate without the marketing restrictions under which the plaintiffs and all other gasoline retail dealers in the three communities must operate" is unsupported by the evidence. The court finds that no restraint of trade will emanate from the opening of the new car wash with its proposed gallonage of gasoline. Any refusal to deal herein on the part of Exxon clearly was not in furtherance of any restraint of trade; Exxon's conduct falls within the confines of United States v. Colgate & Co., 1919, 250 U.S. 300, 63 L. Ed. 992, 39 S. Ct. 465, as limited by United States v. Parke, Davis & Co., 1960, 362 U.S. 29, 4 L. Ed. 2d 505, 80 S. Ct. 503, and Albrecht v. Herald Co., 1968, 390 U.S. 145, 19 L. Ed. 2d 998, 88 S. Ct. 869. Therefore, there is no Section 1 violation. Cf. Rea v. Ford Motor Co., 497 F.2d 577, (3 Cir. 1974), slip op. at pp. 15-21; Weather Wise Co. v. Aeroquip Corp., 5 Cir. 1972, 468 F.2d 716, cert. denied, 1973, 410 U.S. 990, 93 S. Ct. 1505, 36 L. Ed. 2d 188; GAF Corp. v. Circle Floor Co., S.D.N.Y. 1971, 329 F. Supp. 823, 828, aff'd, 2 Cir. 1972, 463 F.2d 752; Beverage Distributors, Inc. v. Olympia Brewing Co., 9 Cir. 1971, 440 F.2d 21, 32-33; House of Materials, Inc. v. Simplicity Pattern Co., 2 Cir. 1962, 298 F.2d 867. Thus, the request for preliminary and permanent injunctive relief will be denied.
IV. Gasoline Sales Agreements
The sales agreements between Exxon and each of the plaintiffs set a minimum of 50 percent of their 1973 sales volumes as the amount which the plaintiffs agree to purchase and a maximum of 105 percent of their 1973 sales volumes as the amount which Exxon would be obligated to supply. Exxon has similar contracts using identical percentages with all the independent dealers it supplies. The contracts with each of the plaintiffs are for one year, from March 1974, to July 1975, and can be terminated by plaintiffs on sixty days written notice. Plaintiffs object to the 105 percent maximum in the contract. Plaintiffs contend that this system of distribution discriminates against independent dealers and will enable Exxon to open additional company-operated stations which will not be subject to contractual limitations on maximum supply and which will therefore enjoy an unfair competitive advantage. In this manner plaintiffs contend that these sales agreements constitute an unreasonable restraint of trade.
For purposes of Section 1, a contract may be an illegal restraint of trade (1) because it constitutes a per se violation, or (2) because an unreasonable restraint of trade is either its object or effect. Times-Picayune Publishing Co. v. United States, 1953, 345 U.S. 594, 97 L. Ed. 1277, 73 S. Ct. 872. There is no evidence that the contracts were designed for the purpose of stifling free competition. Presently, the contracts have no effect whatever since under the federal mandatory allocation program the amount of motor fuel which plaintiffs and all other retail outlets receive is determined pursuant to FEO regulations. The present contracts may well expire before the federal allocation program is terminated and hence the maximum volume limitation which plaintiffs challenge may never have any effect. When the mandatory allocation system is terminated, gasoline may be so plentiful that Exxon will be willing to supply plaintiffs with an unlimited quantity. Furthermore, since the contracts do not constitute per se violations, there can be no Section 1 violation until Exxon has used available gasoline, which it refuses to sell to plaintiffs in accordance with the contractual maximum established, in furtherance of an illegal restraint of trade. Until Exxon has treated its own stations or new customers in a more favorable manner than it treats independent dealers in order to dominate the market or otherwise restrain trade, the contracts cannot be held violative of Section 1. It should be noted that the contracts challenged here, which reduced the maximum Exxon was obligated to supply from 150 percent to 105 percent of each dealer's 1973 gasoline volume, may increase competition in the market in that the lower maximums will free gasoline for distribution and sale that Exxon otherwise would have had to hold in reserve for possible use in fulfilling the contractual obligation imposed by the previous contracts which contained a higher maximum volume.
Plaintiffs have failed to prove that, once the federal allocation program has ended, they would in fact need more gasoline than Exxon would supply them under the present contract or, that if they did need more motor fuel, alternative sources of supply would not at that time be available. The contracts can be terminated by plaintiffs at any time on sixty days written notice. Plaintiffs' contentions with respect to the contracts are purely speculative.
In short, the maximum volume set in the contracts presently having no effect since plaintiffs' allocation of gasoline is determined by the Federal Energy Office and plaintiffs clearly having failed to show that the contracts in the future will stifle competition or otherwise restrain trade, the court holds that presently there is no refusal to deal emanating from the contracts and that any future refusal to deal beyond the maximum amount set in the contract would fall within the Colgate doctrine, United States v. Colgate & Co., 1919, 250 U.S. 300, 63 L. Ed. 992, 39 S. Ct. 465, unless it were proven at that time that the refusal was in furtherance of a restraint of trade. Thus, the court denies plaintiffs' request that the contracts be declared void as violative of Section 1.
V. FEO Regulations
Plaintiffs contend that Exxon's proposed allocation of gasoline for the new car wash violates the Emergency Petroleum Act of 1973, Pub. L. No. 93-159, 87 Stat. 627, and the FEO regulations promulgated thereunder. Specifically, plaintiffs contend that Exxon has improperly determined the base year volume of its new station, which they argue under FEO regulations is entitled to a much smaller allocation of gasoline. Defendant Exxon has filed an application with the FEO for approval of a base year volume for allocation purposes of 853,000 gallons and hence an average base monthly volume of 71,100 gallons for the new car wash station. The Federal Energy Office has not yet acted upon this application. Plaintiffs request that the court, in accordance with FEO regulations, set a proper base year volume for the new car wash, one that will preserve the competitive market positions of independent dealers which must compete with the new company-operated car wash.
The Federal Energy Office has primary jurisdiction of the issue of whether Exxon's proposed base year volume of 853,000 gallons complies with the Emergency Petroleum Act of 1973, supra, and the regulations the FEO has promulgated thereunder. In Far East Conference v. United States, 1952, 342 U.S. 570, 96 L. Ed. 576, 72 S. Ct. 492, the Supreme Court defined the doctrine of primary jurisdiction as:
". . . a principle, now firmly established, that in cases raising issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion, agencies created by Congress for regulating the subject matter should not be passed over. This is so even though the facts after they have been appraised by specialized competence serve as a premise for legal consequences to be judicially defined. Uniformity and consistency in the regulation of business entrusted to a particular agency are secured, and the limited functions of review by the judiciary are more rationally exercised, by preliminary resort for ascertaining and interpreting the circumstances underlying legal issues to agencies that are better equipped than courts by specialization, by insight gained through experience, and by more flexible procedure." 342 U.S. at 574-75.
Not only is the doctrine court-made but the original case creating the doctrine overrode explicit and unequivocal statutory provisions allowing the courts to act initially. Texas & Pacific Railway Co. v. Abilene Cotton Oil Co., 1907, 204 U.S. 426, 51 L. Ed. 553, 27 S. Ct. 350. The principal criterion in deciding whether the doctrine is applicable is not legislative intent but is judicial appraisal of need or lack of need for resort to administrative judgment. In a recent case, MCI Communications Corp. v. American Telephone & Telegraph Co., 496 F.2d 214, (3 Cir. 1974), the Court of Appeals for the Third Circuit held that a district court should have deferred to the appropriate administrative agency, the FCC, under the doctrine of primary jurisdiction and explained:
"The doctrine of primary jurisdiction has been developed by courts in order to avoid conflict between the courts and an administrative agency arising from either the court's lack of expertise with the subject matter of the agency's regulation or from contradictory rulings by the agency and the court. Under the doctrine, a court should refer a matter to an administrative agency for resolution, even if the matter is otherwise properly before the court, if it appears that the matter involves technical or policy considerations which are beyond the court's ordinary competence and within the agency's particular field of expertise."