Randa's decision came in a lawsuit filed by Ogden, Utah-based Flying J Inc., which runs travel plazas in Black River Falls and Oak Creek. The company's attorney, Jonathan Dibble, said the ruling should increase competition and drive down gasoline prices. "The [image-nocss] state has been on autopilot since this passed," he said. "The citizens of Wisconsin have paid hundreds of millions of dollars more than they should have over the years."
Spokespersons for the state Justice and Agriculture, Trade & Consumer Protection departments said their attorneys were still reviewing the decision. But Justice Department spokesperson Bill Cosh said the agency would not bring any enforcement actions while Randa's order stands.
The minimum markup law has been a point of contention for years in Wisconsin. Critics claim it unnecessarily inflated gasoline prices. Passed in 1939, the law prohibits retailers from selling products for less than they paid. In addition, gas stations must tack on 6% over what they paid or 9.18% over the average wholesale price, whichever is higher. The measure was designed to keep larger companies from selling gasoline cheaper than smaller competitors and driving them out of business. Violators can face stiff fines and lawsuits from competitors.
Randa estimated the law cost drivers about 30 cents on every gallon during the past two years, when gasoline prices rose to nearly $4 per gallon. His ruling stems from a 2007 dispute between Flying J and Kenosha, Wis.-based Lotus Business Group. Lotus argued Flying J's stations did not mark up gasoline as required.
In October 2007, a federal magistrate judge ruled the gasoline markup unconstitutional, but state regulators continued to enforce it. Flying J filed a lawsuit against the state Justice and Agriculture, Trade & Consumer Protection departments in January 2008 to stop enforcement.
Randa found the law violates the Sherman Act, a federal statute that limits cartels and monopolies. The restrictions on monopolies would not apply to the state if it had a clear policy and a program to monitor gasoline prices, but it does not, Randa said.
Matt Hauser, president of the Wisconsin Petroleum Marketers & Convenience Store Association, said he was disappointed with the ruling. Wisconsin gasoline prices have typically run less than the national average, he said.
The ruling threatens more than 1,400 gas stations with independent owners in Wisconsin, he added. If they go under, competition will be reduced and prices could climb, he said. "Are Wisconsin consumers better off with more stations or less stations?" he said. "We're hoping for an immediate appeal...to make sure consumers are protected from a less competitive marketplace."
State Senator Tim Carpenter (D) wrote a bill during the last legislative session to repeal the minimum markup, but it went nowhere. Carpenter issued a statement saying the decision should provide consumers relief at the pumps during the recession, and he hopes it will lead to repealing minimum markups on other products. "On behalf of all consumers in Wisconsin," Carpenter said, "I ask the Department of Justice to not appeal this ruling."
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