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The Franchise Memorandum

Former Gasoline Station Franchisee's Claims Denied
Posted in Antitrust

In Partner & Partner, Inc. v. ExxonMobil Oil Corp, 2008 WL 896052 (E.D. Mich. March 31, 2008), the court dismissed the plaintiff’s breach of contract and antitrust claims. The plaintiff was a direct ExxonMobil gasoline dealer until the defendant decided to stop selling gasoline directly to dealers and opted to work with distributors who would purchase gasoline from ExxonMobil and then sell it to individual dealers. ExxonMobil then allowed plaintiff and other dealers to purchase the stations they were leasing previously. The plaintiff purchased its station and entered into a distributorship agreement with one of ExxonMobil’s distributors. Subsequently, an ExxonMobil branded station that purchased gasoline from another of ExxonMobil’s distributors opened within a mile of the plaintiff’s station.

The plaintiff alleged a breach of its previous franchise agreement claiming ExxonMobil made oral promises that it would continue to honor the exclusive territory language in the franchise agreement and antitrust claims alleging a vertical conspiracy to restrain trade. The court dismissed the breach of contract claims because the plaintiff was not operating under a franchise agreement. In addition, the court pointed to an integration clause in the sales agreement that excluded any assertion of verbal promises in interpreting the contract.

The court also dismissed the antitrust claims because the plaintiff failed to assert facts to show that ExxonMobil’s actions created an adverse market-wide effect that hurt competition, as required for vertical conspiracy claims. The plaintiff claimed that the distributor’s requirement that it purchase a certain amount of gasoline from it every year was an antitrust violation. The court found that this requirement was not an antitrust violation because the plaintiff was unable to show an injury to the market, only an injury to plaintiff personally. Similarly, the plaintiff’s claims that ExxonMobil had a dangerous probability of monopolization were dismissed because the plaintiff presented no facts to show that ExxonMobil had a monopoly in the relevant market, or any power to exclude competition.

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