EU Court:Total Spain May Be Able To Keep Gas Station Contracts
April 02 2009 - 12:34PM
Dow Jones News
Europe's highest court ruled Thursday that Total Spain, a unit
of Total SA (FP.FR), may be able to keep a 20-year sole-supplier
contract with a gas-station owner, if Total can prove that it owns
the land.
The determination of who owns the land must be made by a Spanish
Court, according to a ruling in the European Court of Justice, or
ECJ.
The ruling is the third ECJ case concerning Spanish gas stations
and disputes with oil companies. The cases concern issues
particular to Spanish civil property law. This outcome of this case
is likely to affect some of the many similar cases pending in
Spanish courts.
In these cases, gas station owners are trying to have long-term
supply contracts ruled illegal under European Union competition
rules. If they wanted to end the deals under Spanish law, they
would owe compensation to the oil companies.
The case is also expected to clarify how E.U. competition law
should deal with these loopholes.
Under E.U. regulation enacted in 1999, exclusive supply
contracts can exist for up to five years. If an oil company owns
the property or leases it from a third party, then it is exempt
from the five-year rule.
The 20-year contract was legal under laws applying when it was
signed. That law ceased to apply in 2001.
In 1989, Pedro IV Servicios signed a series of contracts with
Total Spain to build a gas station on land Pedro IV owned in Spain.
Part of the agreement was that Total would be the sole supplier of
Pedro IV's fuel for twenty years.
Total, the deal said, would determine the prices Pedro paid.
However, the oil company undertook to limit these to the average
price set by other suppliers in the same market.
In 2004, Pedro IV took legal action to annul the contracts.
Pedro IV argued the contracts severely restricted competition, in
violation of limits set out in European laws on exclusive supply
contracts. The plaintiff also claimed that the contracts violated
rules on indirect setting of resale prices.
The court in Barcelona, Spain, has asked the ECJ to clarify
whether the clauses in question can be covered under the exemptions
in either the 1983 or 1999 regulations.
-By Mike Gordon, Dow Jones Newswires; +352 691 180 766;
mgordon.dowjones@gmail.com