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Shell, Jiffy Lube Face Suit Over ‘Oppressive’ Pricing Scheme

Shell was charging the Plaintiffs prices that were over 260% higher than that of other petroleum suppliers for the same exact products with identical specifications…

The next paragraph only is from an article by Law360. The rest is from information in the featured legal documents filed days ago.

Law360 (July 10, 2019, 6:18 PM EDT) — Two companies that own and operate Jiffy Lube motor oil change service centers in Illinois are suing Shell Oil Products US over what they called an “oppressive and arbitrary pricing scheme”…

The Plaintiffs allege that Shell Oil Products US (“SOPUS”) would continuously, unilaterally, and without reason, increase the price it was charging Plaintiffs for SOPUS Products.


20. It was only in December of 2017 when Plaintiffs commenced purchasing petroleum products from other distributors (at SOPUS’s behest) that Plaintiffs realized SOPUS had been unilaterally and unreasonably raising the price of SOPUS Products and charging Plaintiffs prices that were over 260% higher than that of other petroleum suppliers in the Chicagoland area for the same exact products with identical specifications pursuant to the American Petroleum Institute (“API”).

21. But for the SOPUS Agreement and its oppressive pricing scheme, Plaintiffs would be free to purchase petroleum products from these other suppliers at reasonable market-based prices and rates.

In so doing, SOPUS has placed Plaintiffs at a competitive disadvantage…

39. As set forth herein, Defendants have violated the Franchise Act by arbitrarily discriminating against Plaintiffs and similarly situated franchisees based on the prices of its supplies which actions have and continue to cause Plaintiffs to suffer competitive harm.

41. Such discriminatory practices have caused a competitive harm to Plaintiffs as the extremely high markup being charged by Defendants exceeds market based pricing and has all but eliminated any profit which Plaintiffs would otherwise be able to recognize but for Defendants’ discriminatory practices.

51. As a consequence of SOPUS’s above-described price discrimination, Plaintiffs’ profits have drastically diminished to a point where the future viability of the business is threatened and Plaintiffs may be forced from the market and completely out of business because of the loss of sales and profits directly attributable to SOPUS’s discriminatory and arbitrary pricing scheme.

56. SOPUS, through its acts and omissions as set for above, breached its duty of good faith and fair dealing under the SOPUS Agreement in the following ways, including, but not limited to:

a. Wrongfully discriminating against Plaintiffs in the sale of SOPUS Products by selling like quality and grade SOPUS Products to competitor JLI franchisees/Favored Buyers at a lower cost than that charged to Plaintiffs;

b. Unilaterally, unreasonably, and arbitrarily raising the price of SOPUS Products in bad faith without reference to any legitimate market rate formula or legitimate regional policy; and

c. Charging Plaintiffs a markup of over 260% for SOPUS Products, with knowledge that such a high markup would force Plaintiffs out of business.




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