Order P.930119-3 - Petroleum - Ultramar Canada Inc. - Parkdale Quik Mart

Order No. P.930119-3

IN THE MATTER of Section 46 of the Petroleum Products Act, Stats. P.E.I. 1990, Cap. 43;

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IN THE MATTER of alleged non-compliance by Ultramar Canada Inc. and/or Gary Ramsay with Section 65 of the Petroleum Products Act, supra, in respect of PARKDALE QUIK MART, owned by Ben Livingston & Sons Ltd., and leased and operated by Mr. Gary Ramsay, holder of Petroleum Products License No. D2383-00.

Tuesday, the 19th day of January, A.D., 1993

BEFORE

Linda Webber, Chairman
John Blakney, Vice-Chairman
Myrtle Jenkins-Smith, Commissioner

Decision and Order

Appearances and Witnesses

Participants in the hearing and the parties for whom they appeared were as follows:

FOR ULTRAMAR CANADA INC. AND GARY RAMSAY (PARKDALE QUIK MART), RESPONDENTS:

Counsel:
Mr. John R. A. Douglas

Witnesses:
Mr. Steven Motz, Ultramar Canada Inc.
Mr. James Darnbrough, Ultramar Canada Inc.

Observers:
Mr. Gary Ramsay, Lessee
Mr. Warren Maynard, Promotions Specialist - Ultramar Canada Inc.

FOR THE COMMISSION:

(Mrs.) H. Doris Pursey, Director - Petroleum Division
Mr. Harry MacDonald (Witness) - Assistant to Director - Petroleum Division

RECORDING SECRETARY:

(Mrs.) Faye Weeks

Decision

I. INTRODUCTION

On the 20th day of October, 1992, the Island Regulatory and Appeals Commission ("the Commission") issued a Notice of Hearing indicating that a hearing respecting alleged non-compliance by Ultramar Canada Inc. and/or Gary Ramsay with Section 65 of the Petroleum Products Act, supra, in respect of Parkdale Quik Mart, owned by Ben Livingston & Sons Ltd., and leased and operated by Gary Ramsay, holder of Petroleum Products License No. D2383-00 issued under the Petroleum Products Act, supra, would commence on Monday, the 16th day of November, 1992, at the hour of 10:30 a.m. Notice of the hearing was served on Mr. James Darnbrough of Ultramar Canada Inc., on Mr. Gary Ramsay, licensee, and on Mr. Paul Livingston of Ben Livingston & Sons Ltd., owner, by Mr. Harry MacDonald, Commission Staff Member, on 30 October 1992.

At the written request of Mr. Darnbrough, the date of the hearing was changed to 4 December 1992, and this hearing commenced at 10:30 a.m. on that date.

II. EVIDENCE

Mr. Harry MacDonald, Assistant to the Director, gave evidence that in the 15 and 16 October 1992 editions of the Guardian, advertisements were published which included a gasoline promotion connected with the grand opening of the Parkdale Quik Mart, which promotion was believed to be in non-compliance with Section 65 of the Petroleum Products Act, supra. Mr. MacDonald testified that he had apprised Mr. Darnbrough of this belief by telephone on the morning of 16 October 1992, and this belief was supported in a letter from the Director faxed later on the same date, copies of which were also hand-delivered to Parkdale Quik Mart and Ben Livingston & Sons Ltd. on that date. Mr. Darnbrough responded to this letter on 16 October 1992 wherein he stated that Ultramar did not feel that it was in violation of Section 65 of the Petroleum Products Act due to the circumstances associated with the (grand opening) celebration planned for this outlet the following day.

Mr. MacDonald tabled Exhibits 1 through 13, and gave evidence pertaining to each. Objections were raised by Counsel for Ultramar Canada Inc. with respect to Exhibits 3, 4, 5 and 10, which exhibits concerned an earlier gasoline promotion conducted at the outlet which had previously been dealt with by the Commission. These objections, however, were overruled by the Chairman, who indicated that the documents were evidence of familiarity with Section 65 of the Act by the Respondents in this matter.

Mr. Gary Ramsay was present and participated in the hearing on 4 December 1992, but declined the invitation of the Chairman to give evidence on his own behalf.

Mr. Steven Motz and Mr. James Darnbrough gave evidence as a panel for Ultramar Canada Inc. and did not take issue with the facts as presented by Mr. MacDonald. Mr. Darnbrough indicated that the ad which appeared in the Guardian on the 15th of October was placed by Parkdale Quik Mart and that the ad which appeared on the 16th of October had been placed by Ultramar. Upon, questioning, Mr. Darnbrough indicated that the details of the promotion had been provided to Mr. Ramsay by Ultramar prior to the ad being placed. During the testimony given by the Ultramar representatives, Exhibit 14 was entered on behalf of the Company as an indication that a similar promotion had recently taken place at a grand opening of a motor fuels outlet located in Newfoundland. Evidence given on behalf of Ultramar indicated that the costs incurred as a result of the $5.00 reduction on gas purchases (minimum of 25 litres) to the first one hundred customers were shared by Ultramar and the owner of the outlet, Ben Livingston & Sons Ltd., and that the caps given to the next 100 customers making similar gasoline purchases were paid for by Ultramar. Some suggestion was made that because similar promotions are presently being offered to those outlets in which Ultramar has invested heavily (which are having grand openings or reopenings), the promotion in question did not violate Section 65 of the Act.

III. FINDINGS

The Commission has determined a that breach of Section 65 of the Petroleum Products Act has taken place at Parkdale Quik Mart.

This determination is made based on the following findings of fact:

1. Exhibits No. 6 and 7 and the evidence of Mr. MacDonald establishes that a promotion tied to gasoline sales was advertised with respect to Parkdale Quik Mart, and evidence given by the witnesses for Ultramar confirmed that the promotion in question was initiated by Ultramar, and that the owner and lessee also had some involvement in the matter.

2. The evidence of Mr. Motz confirms that this promotion was not made equally available to all branded dealers supplied by the wholesaler in the Province, contrary to Section 65 (b) of the Act. Mr. Motz's evidence further indicated that at best only those outlets who were experiencing a grand opening (or reopening) at which Ultramar Canada Inc. had heavily invested would ever have the opportunity to participate in a similar promotion.

3. The evidence of Ultramar confirmed that the cost of the promotional activities conducted at this outlet and tied directly to gasoline sales was cost-shared by the supplier, Ultramar, and the owner, Ben Livingston & Sons Ltd., contrary to Section 65(d) of the Act.

The interpretation of Section 65(b) of the Act suggested by Ultramar has been considered by the Commission, but the evidence presented by the Company failed to support the arguments put forward for this interpretation. While suggestions were made that a company policy existed which in Ultramar's opinion would avoid any breach of the Act, the evidence given to support this was at best weak and in some places contradictory.

As well, Counsel for the Company suggested that the mischief to be prevented by Section 65 was forcing dealers to take promotions they did not want. He is only partially correct. The Section is also designed to place operators on a more equal playing field with respect to the sale of petroleum products (for which all dealers of the same supplier pay the same price)--for instance, preventing company-owned or favoured outlets from receiving benefits not available to more independent dealers.

We also note that there are many promotional options available to all dealers without being in breach of this Section. So long as they don't tie these directly to gasoline sales, they are legal. These opportunities appear to us to be quite reasonable and would allow for effective grand opening celebrations.

Given the relative newness of this legislation, however, the Commission is prepared to issue a warning only with respect to this instance of non-compliance. However, we expect Ultramar Canada Inc., as well as the retailer involved, to meet the strict requirements of the law in the future.

Order

THE COMMISSION HEREBY ORDERS AS FOLLOWS:

1. THAT a warning is hereby issued to Ultramar Canada Inc., wholesale supplier of Parkdale Quik Mart, and to Gary Ramsay, lessee of Parkdale Quik Mart and holder of Petroleum Products License No. D2383-00 issued in respect of the outlet under the Petroleum Products Act, supra, that any further breaches with respect to Section 65 of the Act will be dealt with by way of one or more of the penalties available under that Act.

DATED at CHARLOTTETOWN this 19th day of JANUARY, A.D., 1993.

BY THE COMMISSION:

Chairman

Vice-Chairman

Commissioner