Wisconsin Gas Markup Unlawful

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Wisconsin Gas Markup Unlawful

MADISON, Wis. -- A federal judge declared Wisconsin’s 70-year-old minimum markup on gas unconstitutional last week, a ruling that could bring prices at the pump down, The Associated Press reported.

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. The decision came as a result of a lawsuit filed by Flying J, a Utah-based company that operates in Wisconsin.

The company’s attorney, Jonathan Dibble, told the AP the ruling could increase competition and drive down gas prices.

"The state has been on autopilot since this passed," he said. "The citizens of Wisconsin have paid hundreds of millions of dollars more than they should have over the years."

The ruling stems from a 2007 dispute between Flying J and Kenosha-based Lotus Business Group, where Lotus alleged Flying J did not mark up gas. In October 2007, a federal magistrate judge ruled the gas markup unconstitutional, but state regulators continued to enforce it. Then, Flying J filed a lawsuit against the state Justice and Agriculture, Trade and Consumer Protection departments in January 2008 to stop enforcement.

Spokesmen for the state Justice and Agriculture, Trade and Consumer Protection departments said their attorneys were still reviewing the decision. Justice Department spokesman Bill Cosh told the AP the agency wouldn’t bring any enforcement actions while Randa’s order stands.

However, enforcement of the law at retail stations was not definite in the past, according to one retailer. "[State officials] haven’t really enforced it, as far as I know," Bruce Bion, owner of Bion’s Service Center in La Crosse, told the AP. "No one has ever stopped by to check what I’m paying for gas and I’ve been here since 1961."

Passed in 1939, the minimum markup law prohibits retailers from selling products for less than they paid. Under the law, gas stations must add 6 percent to what they paid or 9.18 percent over the average wholesale price, whichever is higher, the report stated.

Matt Hauser, president of the Wisconsin Petroleum Marketers and Convenience Store Association, told the AP he was disappointed with the ruling, and added Wisconsin gas prices have typically run less than the national average. With the ruling, more than 1,400 gas stations with independent owners in the state are threatened, he said, noting that if the small businesses are shuttered, there will be less competition, which will lead to higher prices.

"Are Wisconsin consumers better off with more stations or less stations?" he told the AP. "We’re hoping for an immediate appeal ... to make sure consumers are protected from a less competitive marketplace."