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Wisconsin Removes Minimum Markup
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ASSOCIATED PRESS -
A federal judge has declared Wisconsin's 70-year-old minimum markup on gas unconstitutional, a decision that could save drivers money at the pump.
The state must stop enforcing the mandatory markup on gas because it illegally restricts trade, said Rudolph T. Randa, chief judge of the Eastern District of Wisconsin.
Randa's decision came in a lawsuit filed by Flying J, a Utah company that 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 gas prices.
"The state has been on autopilot since this passed," Dibble said. "The citizens of Wisconsin have paid hundreds of millions of dollars more than they should have over the years."
Spokesmen for the state Justice and Agriculture, Trade and Consumer Protection departments said their attorneys were still reviewing the decision. But Justice Department spokesman Bill Cosh said the agency wouldn't 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 gas prices.
Passed in 1939, the law prohibits retailers from selling products for less than they paid. In addition, gas stations must tack on 6 percent over what they paid or 9.18 percent over the average wholesale price, whichever is higher.
The measure was designed to keep larger companies from selling gas 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 gas prices rose to nearly $4 per gallon.
His ruling stems from a 2007 dispute between Flying J and Kenosha-based Lotus Business Group. Lotus argued Flying J's stations did not mark up gas as required.
In October 2007, a federal magistrate judge ruled the gas markup unconstitutional, but state regulators continued to enforce it.
Flying J filed a lawsuit against the state Justice and Agriculture, Trade and 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 wouldn't apply to the state if it had a clear policy and a program to monitor gas prices, but it doesn't, Randa said.
State Sen. Tim Carpenter, D-Milwaukee, 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."
The state must stop enforcing the mandatory markup on gas because it illegally restricts trade, said Rudolph T. Randa, chief judge of the Eastern District of Wisconsin.
Randa's decision came in a lawsuit filed by Flying J, a Utah company that 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 gas prices.
"The state has been on autopilot since this passed," Dibble said. "The citizens of Wisconsin have paid hundreds of millions of dollars more than they should have over the years."
Spokesmen for the state Justice and Agriculture, Trade and Consumer Protection departments said their attorneys were still reviewing the decision. But Justice Department spokesman Bill Cosh said the agency wouldn't 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 gas prices.
Passed in 1939, the law prohibits retailers from selling products for less than they paid. In addition, gas stations must tack on 6 percent over what they paid or 9.18 percent over the average wholesale price, whichever is higher.
The measure was designed to keep larger companies from selling gas 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 gas prices rose to nearly $4 per gallon.
His ruling stems from a 2007 dispute between Flying J and Kenosha-based Lotus Business Group. Lotus argued Flying J's stations did not mark up gas as required.
In October 2007, a federal magistrate judge ruled the gas markup unconstitutional, but state regulators continued to enforce it.
Flying J filed a lawsuit against the state Justice and Agriculture, Trade and 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 wouldn't apply to the state if it had a clear policy and a program to monitor gas prices, but it doesn't, Randa said.
State Sen. Tim Carpenter, D-Milwaukee, 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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