Wis. AG Mulls Appeal of Minimum Markup Ruling

But will not bringing enforcement actions as long as strikedown order stands

Greg Lindenberg, Editor, CSP

MADISON, Wis. -- Wisconsin's attorney general is considering an appeal of a federal court ruling that struck down the state's minimum markup law for gasoline. J.B. Van Hollen (pictured) has until March 12, said The Hudson Star Observer, to challenge Judge Rudolph Randa's finding that the law that forces gas stations to charge more than 9% above wholesale restrains free trade. (Click here for previous CSP Daily News coverage.)

Merrill gas station owner Raj Bhandari, who was recently told by a judge to stop offering various discounts below the markup, immediately brought back his discounts for seniors. (Click here for previous coverage. Also click here.)

Governor Jim Doyle called the judge's ruling a good thing for consumers. And Assembly Republicans Bill Kramer and Leah Vukmir promised to introduce a bill to end the markup law for good.

But Matt Hauser of the Wisconsin Petroleum Marketers & Convenience Store Association said it would eventually lead to less competition, and he wanted the attorney general to appeal immediately.

In a statement provided to CSP Daily News, Bill Cosh, spokesperson for the Attorney General's Office, said, "We will not speak for other agencies that have enforcement authority, but the Department of Justice will not be bringing any enforcement actions to enforce the minimum markup law so long as this order stands. With regards to are we going to appeal the decision, we are reviewing the decision and have not yet made a decision on whether or not we will appeal. It is the job of the Department of Justice to vigorously defend Wisconsin law." (Click the Download Now button below to view the summary judgment order.)

Randa's decision came in a 2007 lawsuit filed by Ogden, Utah-based Flying J Inc., which runs travel plazas in Black River Falls and Oak Creek, Wis., over a 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.

The law, the Unfair Sales Act, was passed in 1939 to stop big companies from underpricing their gasoline and putting mom-and-pop stations out of business. Many say there is so much competition today that the law is outdated, but lobbyists for those mom-and-pop stations disagree.

A conservative think tank said the law adds 8 cents a gallon to the cost of gasoline, but the state's agriculture secretary said it was more like 1-3 cents.

The federal court ruling stemmed from a lawsuit against the state by a chain involved in a previous suit with another gas station. The case only involves the state's markup for gasoline. Markups for other consumer goods remain in place.