Published since 1951...
July 11, 2007 | Vol. 57, No. 13

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Dear PEI Member:

The U.S. Supreme Court has overturned a 96-year-old decision and held that a manufacturer does not necessarily violate the antitrust laws by establishing a minimum resale price for its products and enforcing the policy by terminating its relationship with a distributor or other reseller who sells below the minimum price.

The case (Leegin Creative Leather Products v. PSKS, Inc.) involved Leegin, a manufacturer of women’s fashion accessories, and PSKS, one of its retailers. In 1997, Leegin instituted a policy announcing that it would only do business with retailers that followed its suggested resale prices. Thereafter, Leegin introduced its “Heart Store Program,” which provides incentives to retailers to promote Leegin’s products in a separate section of their stores. Retailers had to promise to follow Leegin’s suggested resale prices at all times to participate in this program.

PSKS, Inc. operated a retail outlet known as Kay’s Kloset in Lewisville, Texas, in which it offered several clothing lines, including Leegin’s Brighton brand leather goods and accessories. PSKS “invested heavily in advertising and promoting the Brighton brand,” and “by 1999, Brighton was PSKS’ best selling and most profitable line.” In 2002, upon learning that PSKS had placed Leegin’s products on sale (at up to 20 percent below the minimum price established by Leegin), Leegin stopped all shipments of Brighton products to them. PSKS sued, claiming that Leegin had engaged in unlawful resale price maintenance. PSKS relied on the Supreme Court’s 1911 decision that said manufacturers may not set the prices charged by retailers, nor may they establish a minimum resale price under which retailers may not sell.

The Supreme Court in the Leegin case reversed its 1911 decision, ruling that “vertical agreements establishing minimum resale prices can have either procompetitive or anticompetitive effects, depending upon the circumstances in which they are formed” and should not be held per se (or automatically) unlawful. Instead, the Supreme Court ruled that courts should apply the “rule of reason” standard to decide, on a case-by-case basis, whether a particular vertical price restraint violates antitrust laws. The Court noted in its decision that vertical price restraints help prevent discounting resellers from taking a free ride on full service resellers who invest in pre- and post-sale services to promote a manufacturer’s product line. 

The Leegin decision lifts the threat of an automatic antitrust suit where price agreements between manufacturers and distributors are found. It is important to note that the decision doesn’t require such agreements nor does it permit anticompetitive behaviors. Legal experts say the Justice Department could still bring cases where agreements are shown to reduce competition.

The Court’s decision can be viewed here.

Field Evaluation Study of Automatic Tank Gauging Systems, Electronic Line Leak Detection Systems, and Mechanical Line Leak Detectors
is the name of a report prepared by Ken Wilcox Associates for the California State Water Resources Control Board Underground Storage Tank Program. The study was conducted to:

  • Determine the effectiveness of ATGs, ELLDs, and MLLDs in detecting leaks;
  • Compare field performance of ATGs and LLDs with the results of third-party evaluations conducted in a controlled setting;
  • Observe and assess field testing procedures used by service technicians during the annual monitoring equipment certification that is required by California law; and
  • Recommend ways of improving the operational effectiveness of ATGs and LLDs.

The 92-page report is available by clicking here.


Minimum Resale Pricing Case

CA Field Evaluation of ATGs and LLDs

PEI Distributor Changes

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P.E.S., Inc.
, Marion, Iowa, together with affiliated companies B&H Tank Corporation, Advanced Service Corporation, Associated Electric, Inc., Affiliated Leasing Corporation, and Design Builders Construction, LLC, have merged under the corporate name of Acterra Group. The contact information and office locations will remain the same. The web address and email domain have changed to Terry D. Cooper, currently serving a second term on the PEI Board of Directors, is president and CEO of Acterra Group.
Oil Equipment Co., Inc., Madison, Wisconsin, has purchased the customer list and assets of Jepa, Inc., also of Madison. Jepa’s primary focus was hoist and lube industry sales, service and installation. Oil Equipment Co. has retained the product lines and service offerings as they expand into this industry.

The Steel Tank Institute
, which recently announced a change to the limited warranty requirements of all STI-labeled underground storage tanks, has moved the effective date of the new warranty back six months to January 1, 2008. Tanks shipped on or after that date will carry a 10-year warranty.
7-Eleven, Inc.
plans to devote more than $2.4 billion to open 1,000 new stores and refurbish its entire U.S. network of 6,100 stores over the next four years, according to CSP Daily News.

BP, Associated British Foods, and DuPont will invest $400 million to build a new plant in Hull, United Kingdom, which will produce around 420 million liters of ethanol annually beginning in late 2009. The plant will use wheat as a feedstock. BP and DuPont will build an adjacent facility to produce and research biobutanol, an enhanced but currently highly expensive-to-manufacture biofuel. UK demand for biofuels will rise in the coming years, driven by governmental rules that 5 percent of motor fuels must come from renewable sources by 2010.
BP and United Kingdom-based D1 Oils have set up a joint venture to invest around $160 million over the next five years in planting and growing jatropha trees in Southeast Asia, southern Africa, Central and South America, and India. Jatropha trees bear nonedible oilseeds. The joint venture is expected to produce up to 2 million metric tons of jatropha oil per year once all the plantations are established. BP expects regulatory-lead biodiesel demand in Europe will reach 11 million metric tons per year beginning in 2010. D1 Oils owns a biodiesel refinery in Teesside, UK.

Chevron Latin America Marketing LLC and Chevron Amazonas LLC, both indirect, wholly-owned subsidiaries of Chevron Corp., have signed an agreement with D.U.C.S.A.—the state-owned petroleum marketing and distribution company operating under the ANCAP brand—for D.U.C.S.A. to purchase the Chevron fuels marketing business in Uruguay. The agreement will add 90 of Chevron’s Texaco-branded stations to D.U.C.S.A.’s existing retail network in Uruguay. The agreement reflects Chevron’s downstream strategy to improve returns by focusing on areas where it has a competitive supply position and strong brand recognition.

The first petrol station in Hungary to offer E85 opened today in northwest Hungary, according to business daily Világgazdaság. At least three more stations operated by a German oil company are expected to offer E85 in Hungary.
China’s state-owned grain group COFCO said that the Chinese government has stopped approving new ethanol projects regardless of the raw materials, according to The Standard.
McDonald’s will convert its delivery fleet in
Britain to run on biodiesel made from its own recycled cooking oil, according to Reuters. The fast food chain aims to switch all its 155 vehicles to run on biodiesel in the next 12 months.

Electronic board rebuilder
. Global Petroleum Electronic Rebuilders, 4880 Robb Street, Unit 5, Wheatridge, Colorado, has applied for manufacturer division membership. Cliff Corkill is the primary contact for the firm, which was established in 2006. The firm provides POS systems, intercoms, cash drawers, printers and electronic tank gauging systems which are sold through PEI distributors. Sponsored for PEI membership by Bob Kempf, APSIntl, La Porte, CO.
Florida safety and environmental engineering manager. Platinum Engineering & Safety, Inc., 614 East Highway 50, Suite 153, Clermont, Florida 34711, has applied for affiliate division membership. Art Sodermark is president of the firm, which was established in 2001. The firm provides consultation, training and job oversight services to the petroleum and construction industry. Sponsored for PEI membership by Mike Zarrella, WilsonsEqp, Fort Pierce, FL.  
Iowa blending systems designer. Junge Control, Inc., P. O. Box 8391, Cedar Rapids, Iowa 52408, has applied for affiliate division membership. Jeff Gore is sales manager for the firm, which was established in 1984. The company designs fuel blending systems and provides consultation for blending equipment. Sponsored for PEI membership by Joyce Hale, IlliniOMEq, Pekin, IL.
Nigeria service company. Petroleum Solutions Ltd., 4/6 Oil Mill Street, 2nd and 3rd Floors, Lagos Island, Nigeria 2AT 4TT, has applied for affiliate division membership. Tayo Kuforiji is the CEO for the firm, which was established in 1999. Petroleum Solutions provides product specification, project management, installation and maintenance. Sponsored for PEI membership by Blanca Hernandez, NUPI, Imola, Italy.
Pennsylvania technology firm. DirAction, LLC, 111 Bertolet School Road, Spring City, Pennsylvania 19475, has applied for affiliate division membership. Earle Drack is the president of the firm, which was established in 2005. The company offers technology for phase separation and water content measurement in ethanol blended fuel applications. Sponsored for PEI membership by J. Stephen Hieber, PWIinc, New Oxford, PA.
Software designer., 1623 Military Road 475, Niagara Falls, New York 14304, has applied for affiliate division membership. Mark Coughlan is the sales manager for the firm, which was established in 1998. provides internet-based operational software services designed specifically for companies involved with the performance and management of facility and equipment maintenance. Sponsored for PEI membership by Edward S. Kubinsky, Crompco, Plymouth Meeting, PA. The Ambassador is Jim Howard, Hess, Woodbridge, NJ.


  • Mohammed Saad Aldrees & Sons Co. Ltd., Riyadh, Saudi Arabia (dis)
  • Millennium Systems International, LLC, Westminster, MD (aff)
  • Willo Smith, 7-Eleven, Inc., Dallas, TX (O&E)



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Petroleum Equipment Institute
P. O. Box 2380
Tulsa, OK 74101-2380

The TulsaLetter (ISSN 0193-9467) is published two or three times each month by the Petroleum Equipment Institute. Robert N. Renkes, Executive Vice President, Editor. Opinions expressed are the opinions of the Editor. Basic circulation confined to PEI members.