Disgruntled Caltex dealers in South Africa are proceeding with plans to institute a class action suit against US oil giant Chevron Corporation.

The retailers, who on Tuesday held a mass meeting to give an update on planned court action, are accusing the company of turning a blind eye to unethical business practices against dealers, some of whom have been trading under the Caltex brand for decades.

The move comes as the local arm of Chevron is preparing to dispose of its South African shareholding.

The dealers claim that branded marketers appointed as intermediaries between the company and dealers have taken advantage of Chevron’s plan to sell its stake in Chevron SA, with the marketers unilaterally cancelling dealer agreements and selling sites.

Mike French, chairman of the South African Chairman’s Council of Branded Marketer Retailers, said: “With Chevron now selling, they are not too interested and the branded marketers saw an opportunity to seize those sites and not to renew the franchise agreement.”

French said the planned court action was premised on unhappiness that Chevron had allegedly allowed unfair practices to continue despite a clause in their agreements compelling marketers to treat dealers fairly. French said the action would be directed at the branded marketers for not complying with agreements and for removing sites from dealers.

“We’ll be going against Chevron, as well as four of the 10 branded marketer trustees,” French said. A notice of demand was sent to Chevron global CEO John Watson in California three weeks ago, but the company deferred to its local unit.

The South African subsidiary on Tuesday said: “There is no wide-scale cancellation of retailer agreements. The retailer agreements at issue were fixed-term, 15-year agreements that are expiring due to the passage of time, not because of any effort by the branded marketers to cancel them.”

It said it was aware of only one retailer who had raised problems with the branded marketers. But the firm had seemingly washed its hands of the situation. “Only they [the branded marketers] are properly placed to negotiate these commercial contracts with the retailers in their respective clusters.”

French said: “There’s been all sorts of corruption that’s taken place. There’s been retailers who have offered money to Chevron in the past, retailers who offered money to the branded marketers, and Chevron ignored that and, in some instances, ceded sites to the branded marketers and in others sold property to the branded marketers.”

In certain cases, he said, the branded marketers had refused to renew agreements.

He claimed the marketers had also accused the dealers of not complying with black economic empowerment laws. In at least one instance a site was removed from a white person, but it was later discovered that the site had not been sold to a black person but given to a wealthy businessman.

According to Chevron SA, the branded marketer structure accounts for 53% of the total Caltex network. The branded marketer programme was developed a decade ago. There are 10 branded marketers in SA.

•Text courtesy of Business Day (South Africa).

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