MADISON, Wis. -- The latest challenge to Wisconsin's Unfair Sales Act, designed to protect owners of small gas stations from unfair competition, has been filed in Dane County Circuit Court by a national libertarian law firm, reported The Capitol Times.
The Institute for Justice, based in Arlington, Va., filed the case Tuesday on behalf of Merrill, Wis., station owner Raj Bhandari, who ran up against state regulations for selling discounted fuel to seniors and supporters of a youth sports group.
"As consumers nationwide suffer [image-nocss] under record gas prices, the state of Wisconsin is barring filling stations there from offering lower gas prices to consumers," said the Institute for Justice, which bills itself as defending economic liberty and the rights of entrepreneurs.
According to a statement from the group, the suit was filed to "restore common sense to gas pricing in the state and constitutionally enshrined limits on government power."
The minimum markup for motor fuels is part of the state's Unfair Sales Act, which applies to a variety of products including tobacco and liquor. A Depression-era reform, the law is designed to prevent businesses from using predatory pricing practices, such as below-cost sales, to force out competition.
Supporters of the motor fuel portion of the Unfair Sales Actincluding Kwik Trip, PDQ and Stop-N-Gohave argued that it prevents other retailers from selling gasoline as a "loss leader" to lure customers in to buy other merchandise, said the report. "This law works on behalf of consumers to protect a robust market and maintain the independent retailers in this state," Bob Bartlett, executive vice president of the Wisconsin Petroleum Marketers & Convenience Store Association, told the newspaper.
Bartlett said the law is why more than 90% of gas stations in Wisconsin remain independently owned. He said six of 10 stations in the state are run as a family business. "The law has allowed competition to flourish," he added.
The Wisconsin Unfair Sales Act makes it illegal for retailers to sell gasoline without marking it up either 6% over what they paid or 9.18% over the local wholesale price, whichever is higher. Violators face stiff fines from regulators and can be sued by competitors for selling gas too cheap, added an Associated Press report.
The lawsuit, which names the Wisconsin Department of Agriculture, Trade & Consumer Protection and its secretary, Rod Nilsestuen, asks a judge to declare the law unconstitutional and to order the agency to stop enforcing it.
Bhandari argued that the law prevents him from beating his competitors' prices and stops retailers from offering creative sales programs to build customer loyalty. In addition to the discount program, Bhandari said in the lawsuit he would like to offer free coffee with the purchase of gasoline and four gallons of free gasoline every 10 visits, but it is not clear whether the law would allow that.
A state regulator, Janet Jenkins, has said the agency never determined Bhandari violated the law, but wanted to let him know a competitor complained about his discounts and he needed to make sure he was not doing anything wrong. Stations can offer discounts as long as they don't drop the price below the minimum or undercut their competitors.
Click here to view the Institute for Justice's statement.
Click here to view the Wisconsin Petroleum Marketers &
Convenience Store Association's statement on the Unfair Sales Act.
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