Beating Back the 'Big Box'

Marketers push back Kroger's attempt to amend California below-cost law

Published in CSP Daily News

By
Carole Donoghue, Petroleum Editor

Jay McKeeman

SACRAMENTO, Calif. -- Marketers and their allies have defeated an attempt by grocery giant Kroger to amend California's longstanding below-cost sales law--at least for now.

Kroger was the main supporter of a bill introduced by Assemblyman Robert Wieckowski (D) that would have changed the law to make it almost impossible for marketers to sue companies selling fuel below-cost.

(See Related Content below for previous exclusive CSP Daily News coverage.)

Currently, California's Unlawful Practices Act, passed in 1939, only requires a marketer to obtain the invoice cost of fuel that he believes is being sold below cost for the day in question and to apply a cost-of-doing business formula to prove his case.

The Kroger amendment would have required a marketer to get the price of every item that is sold in conjunction with a fuel purchase--and the costs involved in selling each of those items--in order to show that the fuel was sold at a loss. In a typical supermarket, there are more than 10,000 individual products for sale at any given time, according to Rusty Rinehart, a California lawyer who has filed below-cost cases in the past.

Wieckowski maintains the measure would protect consumers by making sure that they could buy fuel at discounted prices, based on points or credits they earn for purchases of groceries or other products.

Kroger has a loyalty program with Shell that allows consumers to earn 10 cents per gallon in discounts, depending on their purchases.

"We overcame 'big-box' organizations and well-funded opposition in the defense of small, toe-to-toe competitors," said Jay McKeeman, vice president of the California Independent Oil Marketers Association (CIOMA). "The Wieckowski measure would have obliterated marketers' ability to take on illegal and predatory below-cost fuel competitors."

Tom Robinson, president of San Jose, Calif.-based Robinson Oil and the Rotten Robbie c-store chain,, who is also chairman of the National Association of Convenience Stores (NACS), was among those testifying against the measure at a California State Assembly Business & Consumer Protection Committee hearing, as well as representatives from CIOMA and a number of small gas station owners.

As reported yesterday in a Morgan Keegan/CSP Daily News Flash, the measure failed on a four-to-four vote.

While the committee killed the Kroger bill, there is an outside chance that it could come up again. For example, it could be tacked on as an amendment to other pending legislation or even reconsidered by the committee, if Wiecowski can persuade the members to take a second look at the measure, sources said.

The fight to kill the Kroger bill was interesting for other reasons, too.

"Kroger didn't seem well-prepared at all," according to one source.

There was also a bonus side-effect that few anticipated. "For the first time, we saw ... the next generation of service station owners becoming actively involved in a legislative fight and become a political force," said one CSP Daily News source. "They wrote letters to the committee members and lobbied the legislators who represent their districts. They were very impressive."

Keywords: 
fuel prices, fuels data