Unfair Sales Act Under Fire

Coalition wants to scrap Wis. minimum markup law; association cites study in support of act

Published in CSP Daily News

MADISON, Wis. -- A bill that would eliminate Wisconsin's minimum markup requirement for gasoline was introduced Tuesday in the state Senate, said the Milwaukee Journal Sentinel.

The bill, introduced by State Senator David Zien (R), strikes provisions in state law requiring markups of 3% to 9.18% for wholesalers and retailers. The current law, which prohibits the sale of gas at below cost, is designed to protect small gas station owners from predatory pricing by larger competitors, said the report.

The Coalition for Lower Gas Prices, [image-nocss] a group that includes government, nonprofit organizations and businesses including Wal-Mart and Murphy Oil, has pushed for an end to the minimum markup on gasoline for several years, the report added.

AAA and other members of the coalition feel the minimum markup law is not able to serve the intent it originally was intended to serve, Ernie Stetenfeld, vice president of corporate relations for AAA, told the newspaper.

A study by a consulting firm commissioned by the coalition estimated that the law is adding 1.3 to 1.8 cents per gallon to the price of gasoline, costing Milwaukee County consumers an additional $5.5 million annually.

Craig M. Thompson, legislative director for the Wisconsin Counties Association, told the paper that revising the markup law would be a way to bring down fuel prices without cutting sales taxes on gasoline, which fund highway projects.

Bob Bartlett, president of the Wisconsin Petroleum Marketers & Convenience Store Association (WPMCA), said his group opposes Zien's bill and supports the current law.

The state law was enacted to prevent large companies from coming into an area and selling gas below cost to knock out competition. The large company, without competition, then could raise prices, said the report.

Bartlett cited a study from the Journal of Urban Economics that found minimum markup laws benefited consumers. Bartlett also noted that the existing Wisconsin law has exceptions that allow station operators to price gas to meet competition.

To read WPMCA's press release on the study, click here.

To visit WPMCA's Unfair Sales Act Resource Center, click here.

To read the full text of the study, click here.