Judge Stops Wisconsin’s Minimum Markup Rule

A federal judge last week declared Wisconsin’s 70-year-old minimum markup on gas unconstitutional, the Associated Press and other news outlets reported.

The state must stop enforcing the mandatory markup on gas because it illegally restricts trade, according to a ruling by Rudolph T. Randa, chief judge of the Eastern District of Wisconsin.

Randa’s decision came Wednesday in a lawsuit filed by Flying J, whose attorney, Jonathan Dibble, said the ruling should increase competition and drive down gas prices.

Critics of the minimum markup law say it unnecessarily inflated gas prices, while supporters said it kept little guys in business, the Associated Press reported. The law was passed in 1939, prohibiting retailers from selling products for less than they paid.

It also required gas stations to tack on 6% over what they paid, or 9.18% over the average wholesale price, whichever is higher.

The Wisconsin Petroleum Marketers & Convenience Store Association issued a statement in regard to Randa’s ruling, and said the repealed law had protected competition and consumers.

“We are very disappointed by the ruling and hope that the Attorney General’s office will vigorously seek an appeal,” WPMCA said in a statement. “The Wisconsin legislature has reviewed the law every session since 1998 and ten previous court cases have upheld the constitutionality of the law. Time after time they found value in a law that promotes competition and protects consumers. States with similar laws have more retail establishments, which leads to a more competitive marketplace. And that’s always good for consumers.”

WSAW TV in Wisconsin reported that at least one area convenience store owner rolled out a gas discount program. Raj Bhandari, owner of two convenience stores in the Merrill, Wis., area, is offering 2-cents-per-gallon discounts to customers 55 years old and older.

Bhandari did the same promotion back in 2007 but was forced to end it after the state threatened him with fines and penalties, WSAW TV reported.

He filed his own lawsuit the same year challenging the gas markup, but recently lost in court. He told the news station he realizes some people in Wisconsin favor the law, but he sees this as an opportunity to bring in more business.

“I feel great about that and as I spoke before also it’s just a different opinion. Some people think it should be there and some people think that it should not be there,” he said.

Though some officials suggest the ruling will only save consumers a few cents per gallon, Bhandari believes his discount will increase his sales by 20%.

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