The District’s attorney general said Wednesday that his office is investigating the city’s largest owner of gas stations for potential antitrust violations.
Attorney General Irvin B. Nathan said that his office is looking into allegations that Capitol Petroleum Group was engaging in practices that could be leading to inflated pump prices.
“Everyone knows that gasoline prices are high,” Nathan said, “and we’re going to do everything we can to bring them down and be sure that it is a competitive market.”
Capitol Petroleum, based in Springfield, is a regional behemoth, netting $778 million in revenue in 2010, according to its Web site. It “owns, operates or supplies” 164 stations in the D.C. area and 71 stations in New York City.
Its primary owner, Eyob “Joe” Mamo, has built the company over nearly 25 years, buying up dozens of service stations in the region — particularly in the past three years. A February Washington City Paper profile of Mamo said the Ethiopian immigrant owned 45 gas stations in the city limits, about half the District’s total, and about one-fourth of the region’s stations.
Nathan said his investigation will probe whether Mamo’s recent expansion of his service station holdings represents an illegal monopoly under the District’s local antitrust law, which is modeled on the federal statute. The investigation might also explore whether Mamo’s dual role as a station owner and gas wholesaler represents an illegal restraint of trade.
Besides owning many stations, Mamo also owns a company, DAG Petroleum, that resells gasoline from refiners to individual service stations — a “jobber,” in industry parlance. Nathan’s investigation comes about four years after the D.C. Council repealed a law it had passed in 2004 that prohibited jobbers from owning individual service stations, based on competition concerns.
Lobbyists hired by Mamo led the charge to overturn the law. John L. Ray, a lawyer and former member of the D.C. Council who lobbied on Mamo’s behalf, declined to comment on the probe. But he testified in 2007 that banning wholesalers from owning stations would raise gas prices, not lower them.
“Will it reduce the cost of gasoline to the driving public? Will it result in gas station operators providing better service to the driving public?” Ray asked at a hearing. “The available evidence clearly supports the opposite.”
The Federal Trade Commission agreed, submitting testimony suggesting that lifting the ban could lower pump prices.
But council member Mary M. Cheh (D-Ward 3), who supported the repeal, said she “made a mistake.”
“It looks like, with his control of however many stations [Mamo] has, that there may be some anti-competitive practices being engaged in,” she said. “I welcome the investigation to see if that’s the case.”
Cheh said she is planning to introduce legislation to restore the prohibition on allowing jobbers to also own retail outlets.
The operator of one District service station, who spoke on the condition of anonymity because he does not want to jeopardize his relationship with the supplier, said that under his lease with Mamo, he has no choice but to buy gas from DAG at the price it sets.
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