OHA also decided that to get a refund, a claimant would have to show that (1) it bought Vickers gasoline from other than Vickers' own service stations during the period covered by the consent order, and (2) if, like Klepper, it bought more than an average of 50,000 gallons a month, it "did not pass through the price increases to its own customers."
In order for companies to show that they had not passed on the price increases, OHA required submission of "data showing the applicant's unrecouped increased product costs (bank) for each calendar quarter for which the firm claims a refund."
Klepper accordingly submitted data on its bank indicating that throughout the consent order period, the bank was increasing.
That showed that Klepper was "banking" at least some of its increased product costs during that time. But it did not necessarily show that Klepper was absorbing Vickers' illegal price increases, because other increased product costs during the same time could have accounted for some or all of the increased bank.
In May 1982, OHA sent letters asking for additional data from Klepper and other resellers of Vickers gasoline to "help us to decide the extent to which you absorbed the price increases. . . ." The letter gave each claimant two options. Method A, which OHA said it preferred, required data on month-by-month prices by Vickers to the companies and corresponding data on the companies' prices to their own customers, along with the number of gallons bought and sold at each price. Method B, which OHA said should be used only if Method A data was not available, required monthly or quarterly figures on gross profits on sales of Vickers gasoline during the period, along with volume sold.
Klepper elected Method B, as its counsel explained in a cover letter to OHA, "because of the limitations of the firm's records and accounting system." In June 1982, it provided monthly figures for gross profit, gallons sold, and margin (profit per gallon).
In November 1982, OHA made a telephone request for additional data on "purchase or selling prices." Klepper complied by estimating its "weighted average cost of product" per gallon.
On June 16, 1983, OHA issued its decision. It found that Klepper had purchased 99,321,001 gallons of Vickers gasoline during the consent order period and that its banks of unrecovered increased product costs "were sufficient to cover the refund applied for in all quarters of the consent order period." However, it found that Klepper had passed on to its customers 30 of the 34 Vickers price increases during the period.
It therefore determined that Klepper was entitled to a refund on only 29,711,120 gallons.
Although Klepper had elected Method B, providing gross profit data, OHA reached its pass-through determination using Method A, the pricing method. For Vickers' prices, OHA used Klepper's submitted figures on its monthly costs. OHA then came up with its own estimates of Klepper's prices to its customers by adding together Klepper's estimate of its weighted cost per gallon with Klepper's estimate of its profit margin per gallon for the same month.
Having reached the 29 million gallon figure using Method A, OHA then employed Method B to determine if Klepper should receive extra refunds for months when it had low profit margins. OHA explained that
Generally, if a firm's profit margin declined substantially during a given period relative to its historical level, we would consider that decline to be evidence of injury to the firm resulting from Vickers' pricing practices. Decreases in profit margin were also considered in conjunction with changes in sales volume level, and an additional refund would be approved for months in which both profit margin and volume fell significantly below their historical levels.