Wawa CEO: There is no "Gentlemen's agreement" with Sheetz

[Brian Lutz]

https://news.yahoo.com/wawa-president-a ... 42614.html

During a recent groundbreaking for a Wawa store in Dauphin County PA (an area that would be considered Sheetz territory), the CEO of Wawa was asked about the so-called "Gentlemen's agreement" that allegedly keeps them from competing with each other directly. He denied the existence of such an agreement, citing several areas where Sheetz and Wawa both have stores in Pennsylvania and Northern Virginia. Even if there is no informal agreement in place both companies do seem hesitant to compete with each other, and it's clear here in NC that there's "Sheetz territory" and "QuikTrip Territory" with no overlap between the two.

[bryceleinan]

https://news.yahoo.com/wawa-president-a ... 42614.html

During a recent groundbreaking for a Wawa store in Dauphin County PA (an area that would be considered Sheetz territory), the CEO of Wawa was asked about the so-called "Gentlemen's agreement" that allegedly keeps them from competing with each other directly. He denied the existence of such an agreement, citing several areas where Sheetz and Wawa both have stores in Pennsylvania and Northern Virginia. Even if there is no informal agreement in place both companies do seem hesitant to compete with each other, and it's clear here in NC that there's "Sheetz territory" and "QuikTrip Territory" with no overlap between the two.

That is the simple answer to the question. Any other kind of answer would leave both chains up to antitrust prosecution, since you cannot prevent competition like that.

[BatteryMill]

That is the simple answer to the question. Any other kind of answer would leave both chains up to antitrust prosecution, since you cannot prevent competition like that.

I do wonder if gentlemen's agreements even exist in retail.

[mbz321]

I do wonder if gentlemen's agreements even exist in retail.

I heard rumors that Wegmans stayed out of the Philly area for years due to a 'gentleman's agreement' with Genuardi's (pre-Safeway ofc). Once Safeway took over, Wegmans did seem to swoop in, so maybe there was some truth to that.

[ClownLoach]

https://news.yahoo.com/wawa-president-a ... 42614.html

During a recent groundbreaking for a Wawa store in Dauphin County PA (an area that would be considered Sheetz territory), the CEO of Wawa was asked about the so-called "Gentlemen's agreement" that allegedly keeps them from competing with each other directly. He denied the existence of such an agreement, citing several areas where Sheetz and Wawa both have stores in Pennsylvania and Northern Virginia. Even if there is no informal agreement in place both companies do seem hesitant to compete with each other, and it's clear here in NC that there's "Sheetz territory" and "QuikTrip Territory" with no overlap between the two.

That is the simple answer to the question. Any other kind of answer would leave both chains up to antitrust prosecution, since you cannot prevent competition like that.

How would you enforce that though? Order Sheetz to immediately build and open locations in Wawa territory and vice versa?

[storewanderer]

Quik Trip confirmed it had an agreement with the OK 7-11 operator that they wouldn't compete...

When that OK finally sold to Japan 7-11, Quik Trip immediately announced some stores in OKC area but not many yet.

[BillyGr]

https://news.yahoo.com/wawa-president-a ... 42614.html

During a recent groundbreaking for a Wawa store in Dauphin County PA (an area that would be considered Sheetz territory), the CEO of Wawa was asked about the so-called "Gentlemen's agreement" that allegedly keeps them from competing with each other directly. He denied the existence of such an agreement, citing several areas where Sheetz and Wawa both have stores in Pennsylvania and Northern Virginia. Even if there is no informal agreement in place both companies do seem hesitant to compete with each other, and it's clear here in NC that there's "Sheetz territory" and "QuikTrip Territory" with no overlap between the two.

That is the simple answer to the question. Any other kind of answer would leave both chains up to antitrust prosecution, since you cannot prevent competition like that.

How would you enforce that though? Order Sheetz to immediately build and open locations in Wawa territory and vice versa?

Probably not so much enforcement by requiring them to build, more likely that if it was provable that there would be fines or similar to punish them for keeping competition from existing. Probably not that easy to prove, as even if they did state that somewhere that was recorded (not likely, particularly as many suspected ones are from times before recordings were easily made), there would also need to be proof that customers would have supported another option had it existed, which doesn't always happen (see ShopRite in Albany - many were simply stuck going to Price Chopper or Hannaford and never cared to check out the new guy in town).

Also seems quite likely that many of these agreements were nothing more than the owners of two chains knowing each other and not being interested in competing with one another (or at least not invading each other's home areas, much like the fairly well known but unproven one here in NY with Wegmans and Price Chopper, where they do overlap but not into Rochester or the Capital District where the chains are headquartered and started).

Thus some, if not most, of them (if they did in fact exist) eventually faded away since those owners that knew each other grew old and others took over and don't have the same thoughts or concerns.

[ClownLoach]

That is the simple answer to the question. Any other kind of answer would leave both chains up to antitrust prosecution, since you cannot prevent competition like that.

How would you enforce that though? Order Sheetz to immediately build and open locations in Wawa territory and vice versa?

Probably not so much enforcement by requiring them to build, more likely that if it was provable that there would be fines or similar to punish them for keeping competition from existing. Probably not that easy to prove, as even if they did state that somewhere that was recorded (not likely, particularly as many suspected ones are from times before recordings were easily made), there would also need to be proof that customers would have supported another option had it existed, which doesn't always happen (see ShopRite in Albany - many were simply stuck going to Price Chopper or Hannaford and never cared to check out the new guy in town).

Also seems quite likely that many of these agreements were nothing more than the owners of two chains knowing each other and not being interested in competing with one another (or at least not invading each other's home areas, much like the fairly well known but unproven one here in NY with Wegmans and Price Chopper, where they do overlap but not into Rochester or the Capital District where the chains are headquartered and started).

Thus some, if not most, of them (if they did in fact exist) eventually faded away since those owners that knew each other grew old and others took over and don't have the same thoughts or concerns.

And fining them would do what exactly? 100% of the fine with interest attached would just be paid by the customers in price increases. There would be no punishment. That's the point, it's unenforceable.

If there was concrete evidence such as "you withdraw your letter of intent to lease the five sites here, and I will stay out of that area there" how would you prove that consumers were actually harmed? Maybe QT would be hated in Oklahoma and the five stores proposed would have failed on their own anyway. It's very difficult to prove damages.

Allegedly the OK 7-Eleven operation was superior to the regular chain (really not difficult). Maybe QT thought they couldn't compete with those "better stores", but they do fine against regular, dirty, smelly corporate 7-Eleven franchises everywhere else. Now that they have a reasonable expectation that the OK stores will see their quality lowered, prices raised, and customers dissatisfied they smell an opportunity to invade the market and be successful.

[storewanderer]

How would you enforce that though? Order Sheetz to immediately build and open locations in Wawa territory and vice versa?

Probably not so much enforcement by requiring them to build, more likely that if it was provable that there would be fines or similar to punish them for keeping competition from existing. Probably not that easy to prove, as even if they did state that somewhere that was recorded (not likely, particularly as many suspected ones are from times before recordings were easily made), there would also need to be proof that customers would have supported another option had it existed, which doesn't always happen (see ShopRite in Albany - many were simply stuck going to Price Chopper or Hannaford and never cared to check out the new guy in town).

Also seems quite likely that many of these agreements were nothing more than the owners of two chains knowing each other and not being interested in competing with one another (or at least not invading each other's home areas, much like the fairly well known but unproven one here in NY with Wegmans and Price Chopper, where they do overlap but not into Rochester or the Capital District where the chains are headquartered and started).

Thus some, if not most, of them (if they did in fact exist) eventually faded away since those owners that knew each other grew old and others took over and don't have the same thoughts or concerns.

And fining them would do what exactly? 100% of the fine with interest attached would just be paid by the customers in price increases. There would be no punishment. That's the point, it's unenforceable.

If there was concrete evidence such as "you withdraw your letter of intent to lease the five sites here, and I will stay out of that area there" how would you prove that consumers were actually harmed? Maybe QT would be hated in Oklahoma and the five stores proposed would have failed on their own anyway. It's very difficult to prove damages.

Allegedly the OK 7-Eleven operation was superior to the regular chain (really not difficult). Maybe QT thought they couldn't compete with those "better stores", but they do fine against regular, dirty, smelly corporate 7-Eleven franchises everywhere else. Now that they have a reasonable expectation that the OK stores will see their quality lowered, prices raised, and customers dissatisfied they smell an opportunity to invade the market and be successful.

The OK 7-Eleven was definitely not better than Quik Trip... Quik Trip would have crushed them... OK 7-Eleven has a strong offer and priced more reasonably but Quik Trip's nicer facilities would have been what crushed them.

But apparently I am wrong and there is no such agreement. Pretty sure I saw otherwise in the past but evidently not.
https://www.kgou.org/oklahoma-news/2019 ... ?_amp=true

[BillyGr]

Probably not so much enforcement by requiring them to build, more likely that if it was provable that there would be fines or similar to punish them for keeping competition from existing. Probably not that easy to prove, as even if they did state that somewhere that was recorded (not likely, particularly as many suspected ones are from times before recordings were easily made), there would also need to be proof that customers would have supported another option had it existed, which doesn't always happen (see ShopRite in Albany - many were simply stuck going to Price Chopper or Hannaford and never cared to check out the new guy in town).

Also seems quite likely that many of these agreements were nothing more than the owners of two chains knowing each other and not being interested in competing with one another (or at least not invading each other's home areas, much like the fairly well known but unproven one here in NY with Wegmans and Price Chopper, where they do overlap but not into Rochester or the Capital District where the chains are headquartered and started).

Thus some, if not most, of them (if they did in fact exist) eventually faded away since those owners that knew each other grew old and others took over and don't have the same thoughts or concerns.

And fining them would do what exactly? 100% of the fine with interest attached would just be paid by the customers in price increases. There would be no punishment. That's the point, it's unenforceable.

If there was concrete evidence such as "you withdraw your letter of intent to lease the five sites here, and I will stay out of that area there" how would you prove that consumers were actually harmed? Maybe QT would be hated in Oklahoma and the five stores proposed would have failed on their own anyway. It's very difficult to prove damages.

Courts can issue many types of orders besides just fines. They could issue an order that prohibits raising the price for a period of time (even word it that any price changes must be only the same as changes in the store's cost, so they are not losing anything if the supplies go up, just not making any more than they were before) to prevent exactly what you suggested.

Even if that wasn't done, raising their prices (while other chains weren't doing so, or more than others are doing if prices are going up as they have been recently) could also punish them, since some customers would opt to not buy from them, as now another brand might have lower cost options, or just because they were upset with the chain for what they had done.

As an example, even though not due to this situation - many posted about no longer getting coffee from Cumberland, since they went from their old $0.99 to $1.29 and then to having different prices for different sizes, such that a large cup that had been $1.07 (after tax) is now $1.83.
They switched to other chains, even though those chains are still more (for instance, Stewarts in NY is $2 for the same size, and I'm sure Dunkin is even higher), just because they were upset that Cumberland raised prices so much in a fairly short time (rather than being happy that they had kept that 99-cent price for FIFTEEN years).

As to how to prove it, I did already say that was difficult for the same reasons you mention (that even building stores in that area wouldn't mean people would go to them, like the ShopRite example I listed).