51.  Jeffrey L. Spears, "Note:  Arguments For and Against
     Legislative Attacks on Downstream Vertical Integration in
     the Oil Industry," 80 Kentucky L.J. 1075, 1078-1079 (Summer,
     1992).

52.  Id.

53.  Fred C. Allvine and James M. Patterson, Competition, Ltd.:
     The Marketing of Gasoline (Bloomington:  Indiana University
     Press, 1972) at 241.

54.  Herbert Hovenkamp, Federal Antitrust Policy:  The Law of
     Competition and its Practice (St. Paul, MN:  West Publishing
     Co., 1994) at 334, 341.

55.  Tenn. Code Ann. §47-25-603(a) (1994).

56.  Black's Law Dictionary, 5th ed. (St. Paul, MN:  West
     Publishing Co., 1979) at 1401.

57.  Hovenkamp (1994) at 329.

58.  Tenn. Code Ann. §47-25-602(10) (1994).

59.  Spears (1992) at 1076 n. 6; Graham Bannock, R. E. Baxter,
     and Evan Davis, The Penguin Dictionary of Economics,
     (London:  Penguin Books, 1987) at 270.  For a discussion of
     the application of the 1982 Merger Guidelines issued by the
     Antitrust Division of the United States Department of
     Justice (relating to horizontal mergers) and the role of
     terminal facilities in the wholesale distribution and
     marketing of gasoline, see G.A. Hay and R. J. Reynolds,
     "Competition and Antitrust in the Petroleum Industry:  An
     Application of the Merger Guidelines" in Antitrust and
     Regulation:  Essays in Memory of John J. McGowan, ed.
     Franklin M. Fisher (Cambridge, MA:  MIT Press, 1985) at 15-
     42.  The Antitrust Division issued revised guidelines 1984
     and, with the FTC, again in 1992, which also apply to
     horizontal mergers.  For a discussion of the 1992 guidelines
     and vertical mergers, see Hovenkamp (1994) at 346-349.

60.  Hovenkamp (1994) at 329-330.

61.  See id. at 351, 384, 393.

62.  Closely related to tying is reciprocity.  Reciprocity, or
     reciprocal dealing, is the sale or lease of a product on the
     condition that the seller purchase a different product from
     the buyer, or when a buyer conditions its purchase of one
     product on the sale of one of its own products to the
     seller.  See id. at 381-384.

63.  For further discussion of exclusive dealing, see notes 23
to
     29 and accompanying text in chapter 4.

64.  Herbert Hovenkamp, Antitrust Black Letter Series, 2d ed.
     (St. Paul, MN:  West Publishing Co., 1993) at 135.

65.  See generally Hovenkamp (1993) at 133-139.

66.  See also Roger D. Blair and David L. Kaserman, Law and
     Economics of Vertical Integration and Control (New York, NY:
     Academic Press, 1983) at 11-27; Wesley J. Liebeler,
     "Integration and Competition" in Vertical Integration in the
     Oil Industry, ed. Edward J. Mitchell (Washington, DC:
     American Enterprise Institute for Public Policy Research,
     1976) at 7-18.

67.  Hovenkamp (1994) at 334.  Vertical price fixing (resale
     price maintenance), however, is per se illegal.  Id. at 138,
     175.  See also David J. Teece, "Vertical Integration in the
     U.S. Oil Industry" in Vertical Integration in the Oil
     Industry, ed. Edward J. Mitchell (Washington, DC:  American
     Enterprise Institute for Public Policy Research, 1976) at
     105-154.

68.  See Hovenkamp (1994) at 336-341; Hovenkamp (1993) at 139-
     142; see also Liebeler (1976) at 20-32; Teece (1976) at 154-
     168.

69.  "For antitrust purposes, a barrier to entry is some factor
     in a market that permits firms already in the market to earn
     monopoly profits, while deterring outsiders from coming in."
     Hovenkamp (1994) at 39; see also Blair and Kaserman (1983)
     at 42-44.

70.  See also infra text accompanying notes 69 to 71; see
     generally 15 U.S.C. section 13; Richard A. Posner, The
     Robinson-Patman Act:  Federal Regulation of Price
     Differences (Washington, DC:  American Enterprise Institute
     for Public Policy Research, 1976); Blair and Kaserman at
     120.

71.  Allvine and Patterson (1972) at 211.

72.  Hawaii, Department of the Attorney General, An Investigation
     of Gasoline Prices in Hawaii:  A Preliminary Report
     (Honolulu:  Sept. 1990) at 7 (hereinafter, "AG (1990)").

73.  Kenneth M. Parzych, Public Policy and the Regulatory
     Environment (Lanham, MD:  University Press of America, 1993)
     at 15.

74.  Id. at 7-8.  The upstream and downstream petroleum
     industries may alternatively be characterized as a
     "successive oligopoly"--one in which two oligopolistic
     industries are vertically related and market power is
     distributed asymmetrically among firms in the two
     industries:  "The upstream firms (suppliers) have the market
     power to decide price (quantity) of intermediate products.
     Taking the input price as given, the downstream firms have
     market power over consumers."  Other forms of oligopoly are
     "bilateral oligopolies", in which the upstream and
     downstream firms bargain over the price of the intermediate
     products, and "mixed oligopolies", in which "the welfare-
     maximizing public firms and profit maximizing private firms
     co-exist in the same industry."  Changqi Wu, Strategic
     Aspects of Oligopolistic Vertical Integration, Studies in
     Mathematical and Managerial Economics, vol. 36, ed. Herbert
     Glejser and Stephen Martin (Amsterdam:  North-Holland, 1992)
     at 9.  See also Parzych (1993) at 15-16.

75.  E. Thomas Sullivan and Jeffrey L. Harrison, Understanding
     Antitrust and its Economic Implications, Legal Text Series,
     2d ed. (New York, NY:  Matthew Bender, 1994) at 32, 256.

76.  See id. at 32-33:  "Even if interdependence results in price
     rigidity in oligopolistic markets, nonprice competition in
     the form of advertising, quality improvements, or pre-or
     post-point-of-sale service may take place.  Each form of
     nonprice competition, however, may be subject to the same
     limits as price competition.  For example, quality
     improvements may be quickly duplicated, giving the innovator
     only a temporary advantage.  Moreover, each form of nonprice
     competition has a cost which will be a restraining force on
     its use or on the minimum price of the product."

77.  See Parzych (1993) at 18-19:

             Tacit collusion, which most approximates
        oligopolistic industry behavior, reflects an awareness
        or recognition among rival firms that forceful price
        competition would be ruinous to the individual firms
        and the entire industry.  Continued price cutting
        would not substantially increase sales and ultimately
        would lead to a rapid deterioration in revenues and
        profitability.  Thus, while firms do not in a
        recordable way communicate their interest or
        willingness to maintain comparable price levels, it is
        instinctively clear that they must avoid competing
        among each other on the basis of substantial
        differences in price.  This inferred awareness,
        without concrete evidence of a conspiracy, is tacit
        collusion.
     
             Ultimately, the net result and impact of this
        form of industry behavior is similar to what would
        occur if the firms had formally, with prior
        arrangement, overtly agreed to fix prices.  In both
        instances, consumers are denied meaningful differences
        in price and ultimately elect to purchase a product
        for other reasons.  Overt collusion, which implies a
        contrived arrangement among competitors to manipulate
        and distort market conditions, is illegal.  Uniformity
        of selling prices, attributable to a conscious and
        arranged effort among rival firms to avoid price
        competition, is a per se violation of law.
     
             In striking contrast, the same market impact,
        arrived at through an implied awareness (tacit
        collusion), is not a readily accepted violation of
        law.  This question of inferential conspiracy has been
        judicially tested on a number of occasions without a
        definitive interpretation having evolved.  While it
        may not appear to be very competitive when firms
        pursue parallel pricing behavior, it has not become a
        consistently interpreted violation without concrete
        evidence or strong circumstantial evidence.

78.  Sullivan and Harrison (1994) at 33.  The question is whether
     this market interdependence constitutes an agreement or
     combination in violation of section 1 of the Sherman Act, or
     whether the behavior is natural and rational in view of the
     market structure.  Id. at 134.  Section 1 of the Sherman Act
     makes unlawful "[e]very contract, combination ... or
     conspiracy in restraint of trade."  15 U.S.C. section 1.

79.  Allvine and Patterson (1972) at 212-213:
     
        The major oil companies will generally refrain from
        price competition and exhibit leadership in
        establishing relatively high and stable prices.  The
        economic theory of markets in which there are
        oligopolistic competitors accurately predicts that the
        prevailing gasoline price will be set at or near the
        price posted by one of the dominant sellers.
        Experience also shows that in any market consisting of
        a small number of dominant sellers, the implicit
        understanding that a price cut can and will be met by
        all other large sellers, effectively serves to deter
        frequent or aggressive price competition.

80.  Id. at 214.

81.  Mark R. Lee, "Oil Price Shocks, Antitrust and Politics:  The
     Supply of Petroleum and the Demand for Regulation," 15 S.
     Ill. U. L.J. 529, 535 (1991) (footnotes omitted).

82.  Id. at 536.

83.  See Andrea Shepard, "Contractual Form, Retail Price, and
     Asset Characteristics in Gasoline Retailing," Rand J. of
     Econ., vol. 24, no. 1 (Spring 1993) at 60:
     
        Gasoline retailing is an example of a principal-agent
        problem in a vertical setting.  It is natural to view
        the station manager, who sells gasoline to the final
        consumer, as the agent and the refiner..., who
        supplies gasoline to the station, as the principal.
        The station itself is an asset in which both parties
        may have some investment.  The contract that governs
        the relationship between the principal and the agent
        specifies how the investment is to be shared and how
        the asset is to be managed.

84.  Id.

85.  See id. at 61-62 and n. 7.

86.  For a discussion of resale price maintenance in the courts,
     see Hovenkamp (1994) at 417-426; Sullivan and Harrison
     (1994) at 151-166.

87.  See infra text accompanying notes 57 to 59.

88.  Walter Miklius and Sumner J. LaCroix, Divorcement
     Legislation and the Impact on Gasoline Retailing in the
     United States and Hawaii (Honolulu:  University of Hawaii,
     Jan. 20, 1993) at 41-42.

89.  United States, General Accounting Office, Energy Security
     and Policy:  Analysis of the Pricing of Crude Oil and
     Petroleum Products (Washington, DC:  March 1993) at 41-42
     (footnotes omitted) (hereinafter, "GAO (1993)").  For a
     discussion of marketing strategy developments since
     decontrol, including the economics of gasoline marketing,
     traditional pricing strategies, distribution strategies, and
     outlet choice, see United States, Department of Energy,
     Deregulated Gasoline Marketing:  Consequences for
     Competition, Competitors, and Consumers (Washington, DC:
     March 1984) at 33-46 (hereinafter, "DOE (1984)").

90.  While this section examines some of these issues, this
     study, for the most part, does not undertake an analysis of
     the international petroleum market or world events
     influencing the dependence of the United States on petroleum
     imports, national energy policy, the history or politics of
     oil and gasoline regulation in the United States, or
     national security or environmental quality concerns.  For
     discussions of these and related topics, see generally
     United States, Department of Energy, The Motor Gasoline
     Industry:  Past, Present, and Future (Washington:  Jan.
     1991) (hereinafter, "DOE (1991)"); United States, Department
     of Energy, The U. S. Petroleum Industry:  Past as Prologue,
     1970 - 1992 (Washington:  Sept. 1993) (hereinafter, "DOE
     (1993)"); Edward R. Fried and Philip H. Trezise, Oil
     Security:  Retrospect and Prospect (Washington, DC:  The
     Brookings Institution, 1993); Joseph P. Kalt, The Economics
     and Politics of Oil Price Regulation:  Federal Policy in the
     Post-Embargo Era (Cambridge, MA:  MIT Press, 1981); H. A. Merklein and W. P. Murchison Jr., Those Gasoline Lines and
     How They Got There (Dallas:  Fisher Institute, 1980);
     Franklin Tugwell, The Energy Crisis and the American
     Political Economy:  Politics and Markets in the Management
     of Natural Resources (Stanford, CA:  Stanford University
     Press, 1988); and GAO (1993).  For a discussion of gasoline
     prices in Hawaii, see notes 39 to 56 and accompanying text
     in chapter 3.

91.  See GAO (1993) at 4-5, 48, 55.

92.  See Nancy D. Yamaguchi and David T. Isaak, Hawaii and the
     World Oil Market:  An Overview for Citizens and Policymakers
     (Honolulu:  East-West Center Energy Program, Aug. 1990) at
     21 (emphasis in original):
     
             OPEC does not control the price of oil.  Since
        1973, no one has been able to control the price of
        oil.  The oil companies are as baffled as the
        consumers, and have lost literally billions of dollars
        on seemingly reasonable investments that turned bad
        because of sudden changes in the price of crude.
        There were signs in the late 1980s that the market was
        beginning to stabilize, and some hope that the 1990s
        might see something approaching a sensible market,
        with prices high enough to encourage conservation and
        development of alternative resources, but not so high
        as to cause a world recession.  The invasion of Kuwait
        may have destroyed that possibility, and the 1990s may
        be as volatile as the 1970s and 1980s.

93.  GAO (1993) at 5.

94.  Fried and Trezise (1993) at 86-87.

95.  Id. at 87.

96.  Id.

97.  GAO (1993) at 6:

        Oil prices change quickly to reflect actual or
        potential changes in the scarcity and value of crude
        oil and petroleum products.  Crude oil prices respond
        faster to oil market shocks today than they did before
        the 1980s, when most oil was purchased in the contract
        market.  Currently, information about events that can
        cause an actual or potential change in the supply of
        and demand for oil is quickly translated into price
        changes on the international futures exchanges.
        Transactions in the other pricing markets will also
        immediately reflect the price changes in the futures
        market that were induced by the market shock.

98.  According to the GAO (1993), "[i]ndustry officials and
     experts and these other modelers point to several factors
     that may help explain why retailers may be slow to pass
     along decreases in their costs.  For example, if price
     decreases at the crude oil and wholesale levels are
     perceived to be temporary, sellers may be disinclined to
     lower retail prices; consumers may become accustomed to the
     higher price; and consumers may not force prices down by
     aggressively shopping for the lowest price."  Id. at 7; see
     also id. at 72-73.

99.  Id. at 45.

100. Id. at 48-49.

101. John Zyren, "What Drives Motor Gasoline Prices?", Petroleum
     Marketing Monthly (Washington, DC:  Energy Information
     Administration, June 1995) at xxii.  The gasoline spread is
     the difference in gasoline price over crude.  See id. at xv.

102. See GAO (1993) at 48-52; see also Philip E. Sorensen, An
     Economic Analysis of the Distributor-Dealer Wholesale
     Gasoline Price Inversion of 1990:  The Effects of Different
     Contractual Relations, manuscript (April 1991) at 3-6.

103. GAO (1993) at 55-56 (footnote omitted).

104. Id. at 56 (footnote omitted).

105. DOE (1991) at 31; see also chapter 16 for further discussion
     of taxation.

106. Id. at 31-32.

107. 15 U.S.C. §2801 et seq. (1995).

108. See, e.g., DuFresne's Auto Service, Inc. v. Shell Oil Co.,
     992 F.2d 920, 925 (9th Cir., 1993); see also John D. Burns
     and Gregory A. Chaimov, "Repairing the Irreparable Harm
     Standard in Petroleum Marketing Practices Act Injunction
     Cases," Franchise L.J., vol. 11, no. 1 (Summer, 1991) at 3.

109. See Miklius and LaCroix (1993) at 41; see generally 62B Am.
     Jur. 2d Private Franchise Contracts §§659-726 (1990).

110. 15 U.S.C. §1 et seq. (1995).

111. 15 U.S.C. §§1, 2 (1995).

112. Arizona, Joint Legislative Study Committee on Petroleum
     Pricing and Marketing Practices and Petroleum Producer
     Retail Divorcement, Final Report (Dec. 1988) (hereinafter,
     "Arizona Report") at 13.

113. See Haw. Rev. Stat. chapter 480.

114. 15 U.S.C. §12 et seq. (1995).

115. Tying arrangements exist when a seller states that the
     seller will sell a product or service (the tying product)
     only if the consumer agrees to purchase another product or
     service (the tied product).  See Hawaii, Legislative
     Reference Bureau, The Hawaii Antitrust Act, Report No. 8
     (Honolulu:  1961) at 23-26.

116. Arizona Report at 13.

117. 15 U.S.C. §41 et seq. (1995).

118. Arizona Report at 13.

119. See 49 Stat. 1526 (1936).

120. 15 U.S.C. §13 (1995).

121. See Posner (1976) at 1-2.

122. 15 U.S.C. §1051 et seq. (1995).

123. Arizona Report at 24; Andrew D. Smith, "Comment:  Trademark
     Law:  Equity's Role in Unfair Competition Cases," 13 U. Haw.
     L. Rev. 137, 141 (Summer 1991).

124. See Hawaii, Department of the Attorney General, Gasoline
     Prices in Hawaii:  The Impact of Oil Company Divorcement on
     Consumer Prices (Honolulu:  1993) at 25-27.  In particular,
     the Attorney General discussed the following bills:

          The Motor Fuel Consumer Protection Act (S. 790)
          would have enacted divorcement by prohibiting
          producers or refiners from operating any motor fuel
          service station in the United States.  The bill
          would have allowed producers or refiners to own all
          or part of the assets of a service station so long
          as the producer or refiner did not engage in the
          business of selling motor fuel at the station
          through any employee, agent, or other person acting
          under the control or supervision of the refiner or
          producer.  In addition, this bill would have enacted
          an open supply requirement, which would have imposed
          a seventy percent cap on the monthly retail sales of
          gasoline that a producer or refiner could require a
          retail dealer to purchase, and would have forbidden
          a producer or refiner from restraining the amount of
          fuel that a dealer could purchase.
     
          The Petroleum Marketing Competition Enhancement Act
          (S. 2041; H.R. 2966) would have prohibited refiners
          from engaging in price inversion, i.e., from
          supplying gasoline to their wholesale customers at a
          higher price than offered at their own company-
          operated retail stations less an amount for the
          company's cost to operate at retail.  The bill also
          would have prohibited refiners from engaging in
          price fixing, i.e., from entering into any scheme or
          agreement to set, change, or maintain maximum retail
          prices of motor fuel, except with respect to the
          refiner's retail sales at its direct operated
          outlets.
     
          The Motor Fuel Marketing Competition Act (S. 2043)
          would have prohibited price inversion and price
          fixing similar to that provided in the Petroleum
          Marketing Competition Enhancement Act, and further
          would have prohibited supply discrimination by a
          refiner against established customers in favor of
          its own directly operated outlets during periods of
          short supply.
     
          A fourth bill reviewed by the Attorney General, the
          Petroleum Marketing Competition Enhancement
          Practices Act, which was developed as a compromise
          measure near the end of the 102d Congress, was
          apparently never introduced.  That bill would have
          prohibited refiners from practicing price inversion
          and would have enacted an open supply provision.  In
          addition, the bill would have given the Justice
          Department and state attorneys general both criminal
          and civil enforcement authority, and allow persons
          injured in their business or property, including
          competitors, to sue for treble damages and
          injunctive relief.

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