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article imageOnt. Sunoco franchisees launch class action suit against Suncor

By Stephanie Dearing     Jan 19, 2010 in Business
Last week Suncor Energy Inc. announced sweeping cuts as part of its ongoing streamlining process after the giant oil sands producer bought up Petro-Canada.
Calgary, Alberta - Not only will Suncor be selling off anywhere from $2 billion to $4 billion in assets, it will lay off another 1,000 employees after its layoff of 1,000 people in late 2009. Suncor spokesman Brad Bellows told press “I wouldn’t characterize these as layoffs. What we are talking about primarily here are jobs that are associated with the divestments we planned over the course of 2010. What frequently happens in asset sales like this is the people go with the asset to the new owner." Suncor is selling off some natural gas assets as it hones in on its target of focusing on the oil sands, which it said provides the best return on its money. Suncor is looking to increase oil sands production from 300,000 barrels a day to over 1 million per day. Suncor also aims to reduce its $13 billion debt by $3 billion in 2010.
According to 300 Ontario Sunoco retailers, Suncor made an internal announcement last week that it would end franchise agreements with Sunoco retailers. The retailers said 100 stations are slated for closure, with the rest to be re-branded. In response to the announcement, Ontario Sunoco retailers launched a class action lawsuit Tuesday, claiming Suncor has violated their franchise agreements, and Ontario law. The law suit is seeking $200 million from Suncor. A press release issued by the affected retailers said Suncor was terminating the franchise agreements with all 300 station owners.
Suncor was required to divest itself of 104 Ontario gas stations as part of the Competition Bureau's approval of the merger with Petro-Canada, which took place in the summer of 2009. Husky bought 98 Ontario gas stations from Suncor in December 2009. 68 of those stations were Sunoco stations, and the remainder were Petro-Canada stations.
Another requirement of the merger stipulated by the Bureau will see Suncor selling its greater Toronto area terminal storage and distribution centers. Suncor also has to sell 98 million litres of gas each year to independent gas stations in Ontario.
More about Suncor, Sunoco retailers, Class action lawsuit, Franchise agreements, Petro-canada
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