On June 1, 1965, the Federal Traxle Commission received Supreme Court blessing of its long outstanding ruling that oil companies and tire companies must discontinue contracts under which the tire manufacturers have paid substantial sums to the oil companies to promote the sales of their lines of tires, batteries, and accessories (TBA) through leased service stations on an exclusive basis. This validated ruling threatens to upset a supplier-dealer relationship of great economic significance that has been in effect for many years.
Oil Company Power Bars TBA Marketing
These sales commission contracts were built on the oil company's "economic leverage" to force its retail outlets to buy the product lines covered, the Supreme Court said, in upholding the FTC. Although the FTC also found evidence that the oil companies exercised actual coercion by requiring operators of service stations—supposedly independent small businessmen—to sell only the sjjonsored line of TBA or lose the franchise and the benefit of certain overall management services performed by the oil companies, that part of the ruling was not appealed to the Supreme Court. As a result of the latest high court decision, if the oil companies want to retain a hand in the sale of TBA sold through their branded stations, a new relationship between gasoline supplier and dealer will have to be established—one that presumably creates a more even balance of bargaining power between those two distribution levels.