SB434 By Senator Holtzclaw RFD Fiscal Responsibility and Economic Development Rd 1 30-APR-15

SYNOPSIS: This bill would clarify and simplify existing law relating to combined sales of motor fuel and other goods under the Motor Fuel Marketing Act.

A BILL TO BE ENTITLED AN ACT

To amend Sections 8-22-2, 8-22-4, 8-22-8, and 8-22-10, Code of Alabama 1975, relating to the Motor Fuel Marketing Act; to revise and clarify legislative intent relating to combined sales of motor fuel and other goods.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:Section 1. Sections 8-22-2, 8-22-4, 8-22-8, and 8-22-10 of the Code of Alabama 1975, are amended to read as follows:

§8-22-2.

"The Legislature makes the following findings with respect to the marketing of motor fuel in Alabama:

"(1) Marketing of motor fuel is affected with the public interest.

"(2) Unfair competition in the marketing of motor fuel occurs whenever costs associated with the marketing of motor fuel are recovered from other operations, allowing the refined motor fuel to be sold at subsidized prices. Such subsidies most commonly occur in one of three ways: when refiners use profits from refining of crude oil to cover below normal or negative returns earned from motor fuel marketing operations; and where a marketer with more than one location uses profits from one location to cover losses from below-cost selling of motor fuel at another location; and where a business uses profits from nonmotor fuel sales to cover losses from below-cost selling of motor fuel.

"(3) Independent motor fuel marketers (i.e., dealers, distributors, jobbers, and wholesalers) are unable to survive predatory subsidized pricing at the marketing level by persons when all of an independent's income comes from marketing operations.

"(4) Subsidized pricing is inherently predatory and is reducing competition in the petroleum industry, and if it continues unabated, will ultimately threaten the consuming public.

§8-22-4.

"The following terms shall have the meanings ascribed to them in this section unless otherwise stated and unless the context or subject matter clearly indicates otherwise:

"(1) PERSON. Any person, firm, association, organization, partnership, business trust, joint stock company, company, corporation, or legal entity.

"(2) MOTOR FUEL. Those products upon which the state excise tax levied, or defined, in Sections 40-17-1 through 40-17-52 and 40-17-170, as amended, is imposed.

"(3) WHOLESALER. Includes any person qualified as a wholesaler of motor fuel with the state Revenue Commissioner, and shall also mean and include any person, other than a buying pool defined herein, wherever resident or located, who brings or causes to be brought into this state motor fuel purchased directly from the manufacturer thereof.

"(4) WHOLESALE DISTRIBUTION. Any person, or the act of any person, including any affiliate of such person, in commerce within the state, who purchases motor fuel for sale, consignment or distribution to another, or, receives motor fuel on consignment for consignment or distribution to his own motor fuel accounts or to accounts of his supplier, but shall not include a person who is an employee of, or merely serves as, a common carrier providing transportation services for such supplier.

"(5) RETAILER. Includes any person who is engaged in this state in the business of selling motor fuel at retail to the general public for ultimate consumption, and includes any group of persons, cooperative organizations, buying pools and any other person or group purchasing motor fuel on a cooperative basis from licensed distributors or wholesalers.

"(6) BUYING POOL. Includes any combination, corporation, association, affiliation or group of retail dealers operating jointly in the purchase, sale, exchange or barter of motor fuel, the profits of which accrue directly or indirectly to such retail dealers.

"(7) SALE or SELL. Any transfer for a combination, exchange, barter, gift, offer for sale, advertising for sale, soliciting an order for motor fuel and distribution in any manner or by any means whatsoever.

"(8) SELL AT WHOLESALE, SALE AT WHOLESALE and WHOLESALES. Includes any sale made in the ordinary course of trade or usual conduct of the wholesaler's business to a retailer for the purpose of resale.

"(9) SELL AT RETAIL, SALE AT RETAIL and RETAIL SALES. Includes any sale for consumption or use in the ordinary course of trade or usual conduct of the seller's business.

"(10) CUSTOMARY DISCOUNT FOR CASH. Includes any allowance, whether a part of a larger discount or not, made to a wholesaler or retailer when such person pays for motor fuel within a limited or specified time.

"(11) REFINER. Any person engaged in the production or refining of motor fuel, whether such production or refining occurs in this state or elsewhere, and includes any affiliate of such person.

"(12) COST TO REFINER. That refiner's posted terminal price to the wholesale class of trade. In the event a refiner does not regularly sell to the wholesale class of trade at that terminal or does not post such a terminal price, it may use as its cost the posted price of any other refiner at any terminal within the general trade area which has products readily available for sale to the wholesale class of trade.

"(13) COMPETITION. Includes any person who competes with another person in the same market area at the same level of distribution.

"(14) BASIC COST OF MOTOR FUEL. Whichever of the two following amounts is lower, namely, (i) the most recent invoice cost of motor fuel to the wholesaler or retailer, as the case may be, or (ii) the lowest replacement weighted-average cost of motor fuel to the wholesaler or retailer, as the case may be, within five days prior to the date of sale, in the quantity last purchased (whether within or before the said five-day period), less, in either of said two cases, all trade discounts except customary discounts for cash, plus the full value of freight costs and any taxes which may be required by law, now in effect or hereafter enacted, if not already included in the invoice cost of the motor fuel to the wholesaler or retailer, as the case may be. In computing its basic cost of motor fuel, its cost of doing business and in meeting competition under Section 8-22-8; a refiner that assesses a processing fee of any kind for credit card transactions must assess such fees in a like manner to its affiliates.

"(15) COST TO WHOLESALER. As applied to wholesale distribution, the most recent invoice or replacement weighted-average cost of the motor fuel within five days prior to the date of sale, in the quantity last purchased, whichever is less, less all trade discounts except customary discounts for cash, to which shall be added all applicable state, federal and local taxes, inspection fees, freight charges not otherwise included in the cost of motor fuel, cartage to the retail outlet, if paid by the wholesaler, plus the cost of doing business.

"(16) COST TO RETAILER. As applied to retail sales, the most recent invoice or replacement weighted-average cost of the motor fuel within five days prior to the date of sale, in the quantity last purchased, whichever is less, less all trade discounts except customary discounts for cash, to which shall be added all applicable state, federal and local taxes, inspection fees, freight cost, if paid by the retailer, plus the cost of doing business.

"(17) COST OF DOING BUSINESS or OVERHEAD EXPENSES. Includes all costs incurred in the conduct of business, including but not limited to: labor (including salaries of executives and officers), rent (which rent must be no less than fair market value based on current use), interest on borrowed capital, depreciation, selling cost, maintenance of equipment, transportation or freight cost, losses due to breakage or damage; credit card fees, or other charges; credit losses, all types of licenses, taxes, insurance, and advertising.

"(18) TRANSFER PRICE. Includes the price used by a person in transferring motor fuel to itself or an affiliate for resale at another marketing level. Such price shall be determined using standard, functional accounting procedures.

"(19) AFFILIATE. Any person who (other than by means of franchise) controls, is controlled by, or is under common control with, any other person.

"(20) OTHER GOODS. Any other articles, products, commodities, gifts, or concessions sold in a combined sale with motor fuel.

"(21) BASIC COST OF OTHER GOODS. The lower of the two following amounts:

"a. The most recent invoice cost of other goods to the wholesaler or retailer, as the case may be, less all trade discounts except customary discounts for cash, plus the full value of freight costs and any taxes which may be required by law, now in effect or hereafter enacted, if not already included in the invoice cost of the other goods to the wholesaler or retailer, as the case may be.

"b. The weighted-average cost of other goods to the wholesaler or retailer, as the case may be, less all trade discounts except customary discounts for cash, plus the full value of freight costs and any taxes which may be required by law, now in effect or hereafter enacted, if not already included in the invoice cost of the other goods to the wholesaler or retailer, as the case may be.

§8-22-8.

"(a) It is not a violation of this chapter if a difference exists between the transfer price or sales price of motor fuel of like grade and quality and the price charged to a person who purchases for resale at the same level of distribution, including any discounts, rebates, allowances, services, facilities granted any of a supplier's own marketing operations in excess of those provided to a person who purchases for resale at the same level of distribution, if the lower price is due to a cost differential incurred because of a difference in shipping method, transportation, marketing, sale or quantity, in which such motor fuel is sold.

"(b) It is not a violation of this chapter if any price is established in good faith to meet an equally low price of a competitor in the same market area on the same level of distribution selling the same or a similar product of like grade and quality or is exempt under Section 8-22-13.

"(c) It is not a violation of this chapter for a retailer to offer to sell, or sell, motor fuel in a combined sale with other goods when the retailer's combined selling price is not below the cost to the retailer of all motor fuel and other goods included in the transactions. A combined sale permitted by this chapter includes both contemporaneous sales and also sales or series of sales that are not contemporaneous, including where the purchaser receives accrued discounts or credits on motor fuel as a result of the purchaser's earlier purchases of other goods from the retailer.

§8-22-10.

"In all advertisements, offers for sale or sales involving two or more items, at least one of which items is motor fuel, at a combined price, and in all advertisements, offers of sale, or sales, involving the giving of any gift or concession of any kind whatsoever (whether it be coupons or otherwise), the wholesaler's or retailer's combined selling price shall not be below the cost to the wholesaler or the cost to the retailer, respectively, of the total of all articles, products, commodities, gifts, and concessions included in such transactions, except that if any such articles, products, commodities, gifts, or concessions, shall not be motor fuel, the basic cost thereof shall be determined in like manner as provided in subdivision (14) of Section 8-22-4 motor fuel and other goods."

Section 2. This act shall become effective immediately following its passage and approval by the Governor, or its otherwise becoming law.

Motor Fuel

Motor Fuel Marketing Act

Legislature

Code Amended