Monopoly? Judge says Ky. can sue Marathon Oil

Kentucky has scored a first round victory in its federal antitrust lawsuit against Marathon Petroleum Co.

A judge denied most of the oil company's motion to dismiss the claims, which means the case will move forward.

In a brief statement Monday, Attorney General Andy Beshear's office said that it's "actively pursuing this case to better protect Kentucky consumers and families. We agree with judge’s decision and we will move forward aggressively on the merits.”

Marathon spokesman Jamal Kheiry said that the company doesn't comment on pending litigation.

Former Attorney General Jack Conway's office sued Marathon in federal court in the Western District of Kentucky last May, alleging that  Marathon violated federal anti-monopoly and state consumer protection law by using supply agreements and deed restrictions on real estate to limit competition. Conway contended that customers primarily in Louisville and Northern Kentucky consequently are forced to pay higher prices at the pump than consumers in other regions.

After filing the claim, the state hired Boies Schiller & Flexner of New York and Strauss Troy of Cincinnati to litigate that case. The new lawyers filed an amended complaint July 22. Marathon's lawyers of Frost Brown Todd had responded last August that Marathon's agreements are legal contracts and that Kentucky failed to advance an adequate claim for relief.

Snyder and Blickensderer also asserted that Conway didn't have authority to recover damages under the Clayton Antitrust Act, noting that the Sherman Antitrust Act, which prohibits anti-competitive practices, allows an official to pursue monetary relief on behalf of state residents.

Judge David J. Hale ruled late last week that both federal antitrust and state consumer protection laws apply in this instance and that Kentucky offered factual allegations to back its assertions.

"At this stage, that is enough," he wrote.

In picking through arguments on both sides, Hale cautioned that he couldn't yet determine whether Marathon's exchange agreements - deals between refiners that Kentucky alleges are anti-competitive - "are meant to further Marathon's alleged stranglehold on RFG (reformulated gasoline) in Louisville and Northern Kentucky. But at this stage, the facts alleged are sufficient for the court to draw the reasonable inference that they are.

"It is plausible that Marathon meant to discourage other suppliers from creating supply to the market with these agreements....discovery is necessary on this point," Hale wrote.

In total, all but one of the claims brought by Kentucky will proceed. Hale granted Marathon's motion to dismiss an element of the case centered on Marathon unjustly enriching itself.

Reporter Grace Schneider can be reached at 502-582-4082 or gschneider@courier-joiurnal.com.