THE WALL STREET JOURNAL: Shell Denies Trying To Drive Dealers Out Of Business: “Proceedings of a lawsuit filed against Royal Dutch/Shell Group (RD, SC) by Shell service station owners in Massachusetts started Monday in a U.S. District Court in Boston.” (ShellNews.net) Posted 17 Nov 04
By DAVID BOGOSLAW
Of DOW JONES NEWSWIRES
NEW YORK -- Shell Oil Products U.S. said Tuesday its wholesale gasoline pricing and rents on service stations charged to franchisees are "fundamentally fair" and denied claims it tried to drive certain franchisees out of business.
Proceedings of a lawsuit filed against Royal Dutch/Shell Group (RD, SC) by Shell service station owners in Massachusetts started Monday in a U.S. District Court in Boston. Eight station owners charge that Shell raised wholesale prices and rents on service stations in the late 1990s in an effort to drive them out of business.
"The current rent structure is based on the appraised value of the real estate, improvements and equipment, using standard commercial real estate techniques," a Shell spokesman said in an e-mailed response to Dow Jones Newswires. "To the extent the rents went up, it was to bring them in line with the rest of the market."
The station owners are claiming that the elimination of rent subsidies violated agreements Shell had with the franchisees, said Gary Greenberg, of Greenberg Traurig, the law firm representing the station owners.
"The elimination of the rent credits was motivated by an intention to drive the stations out of business or to force them to sell (the franchises) back to Shell at less than fair value" so that Shell could increase its profits from owned and operated stations, Greenberg said.
The higher wholesale gasoline prices to the franchisees were set in bad faith and weren't commercially reasonable, Greenberg added.
Shell cited an industry study that confirmed the prices Shell charged dealers between 1997 and 2003 "were consistently in the range of the prices charged by other major branded marketers of gasoline."
The station owners are seeking the lost diminished value of their businesses, as well as lost investments, plus compensation for the excessive rents they have paid and for excessive monies paid for wholesale gasoline prices, Greenberg said. If the verdict favors the plaintiffs, the jury would determine the dollar amount of the damages.
Four of the eight dealers have already closed their businesses, he said.
A Shell spokeswoman said one of the eight plaintiffs settled with Shell out of court Monday, leaving seven plaintiffs in the suit. Greenberg said he couldn't comment on any settlements that dealers have made.
-By David Bogoslaw, Dow Jones Newswires; 201-938-5289; david.bogoslaw@dowjones.com