HOLLISTER, Calif. -- Two judges have taken opposite approaches in handling big-box below-cost gasoline sales lawsuits brought before them.
A judge last week ordered a Safeway Inc. gas station in Hollister, Calif., to stop selling fuel below cost to harm competitors, reported the Santa Cruz Sentinel. And a judge has ruled that a Denver City Market grocery store can continue to sell discount gasoline to customers while a case continues to make its way through the court system, reported 9NEWS-TV.
An attorney for the Safeway grocery [image-nocss] chain said the store's prices are legal. The store is still selling gasoline, and both Safeway representatives and those for the competitor, Dassel's, said there has been no change in pricing, the report said.
Troubles began in mid-2002 for Dassel's Petroleum Inc. in Hollister, when Safeway started selling gasoline at a nearby store. Safeway generally priced its gasoline to match competitors, but gave those carrying a free Safeway card a 3-cents-per-gallon discount, Gavin Kogan, the attorney representing Dassel's, told the newspaper. As a result, the other independent gas retailers saw their volumes and customer sales dropping precipitously, he said.
Several gas stations have identified Safeway as a reason some stations have gone out of business, he said.
Hollister-based Dassel's Petroleum Inc. filed suit in May 2004, according to the report. Attorneys alleged Safeway was selling regular unleaded gasoline to the public at prices below its cost with the intent to harm competitors.
While the case waits to go to trial, a judge in San Benito County Superior Court issued a preliminary injunction last week ordering Safeway to stop selling below cost with the plan to hurt others, the report said. Selling below cost is generally only illegal if done with the intent to injure competition.
Safeway is large enough to absorb costs of selling cheap gasoline, and it is doing so to drive out competitors and create a monopoly in Hollister, Kogan said.
Safeway representatives defended the pricing. It's Safeway's position that it has always complied with the law in pricing gasoline and intends to continue complying with the law, John Makin, outside council for Safeway with law firm Greenan, Peffer, Sallander & Lally, told the paper.
Representatives for Dassel's tracked Safeway's prices and watched the market over time to arrive at their conclusions, Kogan said.
Should a judge there rule Safeway is pricing illegally, it could affect all big-box stores selling gasoline, Kogan speculated. Other large retailers that sometimes absorb costs of selling cheap fuel to attract customers shopping for other things might not be allowed to in the future, he said.
Meanwhile, in Denver, a federal judge said a City Market grocery store on the Western Slope can keep selling discount gasoline while its case progresses.
As reported in CSP Daily News early this year, Parish Oil Co. and Ray Moore Tire & Petroleum Service Inc. filed suit claiming City Market, sells gasoline below cost, hurting their business. There is a provision in Colorado's Unfair Practices Act that prevents retailers from selling gasoline below their wholesale costs.
City Market, which is owned by Cincinnati-based The Kroger Co., has argued that its gasoline discounts are part of an incentive program designed to lure grocery shoppers.
The ruling was made on a request for a preliminary injunction. The case itself will continue to be heard in court, the report said.
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