State probes antitrust rumors surrounding Yukon Fuel sale

Posted: Tuesday, September 30, 2003

ANCHORAGE (AP) The state attorney general's office is investigating antitrust concerns raised over the sale of one of the largest fuel distributors in Western Alaska.

Yukon Fuel Co., and its parent company are for sale and some Western Alaska groups are concerned that its main competitor, Crowley Maritime Service, may purchase the company.

The potential effect of Crowley's purchase is so substantial that the state has an obligation to learn more about it, said Ed Sniffen, assistant attorney general in the Commercial and Fair Business Division.

Tom Martin, spokesperson for Yukon Fuel's parent company Northland Holdings Co., said several buyers are interested but a confidentiality agreement prevents him from naming them.

Crowley spokesperson Mark Miller also would not confirm whether the company is interested in purchasing Yukon Fuel.

But Meera Kohler, executive director of the Alaska Village Electric Cooperative, said Yukon Fuel informed her that Crowley was a likely buyer.

The cooperative operates diesel-powered electric plants in 51 villages, buying 5.5 million gallons of fuel annually and is a major customer of Yukon Fuel.

Such a sale could easily drive up the price of fuel and electricity, Kohler said. ''Without competitors, it would be whatever the market will bear, with no alternatives,'' she said.

The Yukon Fuel sale is also a concern to the Alaska Power Association, which is also investigating, said executive director Eric Yould.

''Diesel is the prime feedstock for rural Alaska,'' Yould said. ''We're not the kind of community that you have in the Lower 48 where you can run propane or natural gas.''

The state Department of Law is concerned that a lack of competition could drive the price of diesel fuel up in Western Alaska, Sniffen said. And armed with subpoena powers, the department is able to get answers that others cannot.

''I'll be asking the companies to explain to us what it is they're proposing to do and how it might affect the competition,'' Sniffen said.

Crowley and another rival distributor, Delta Western, formed a joint venture in 1986 that eventually drew accusations of price fixing.

In 1992, the company agreed to pay $1.2 million to settle a federal class-action lawsuit. The lawsuit was brought by more than 1,000 Western Alaska fuel customers.

A Crowley attorney told the Anchorage Daily News in 1992 that the company did not admit to guilt but agreed to the settlement to end six years of litigation.

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