The Badger Herald: News: Court calls gas markup illegal

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Court calls gas markup illegal

Judge finds that state’s 9.4 percent hike is unconstitutional, gas prices may drop soon

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By Alex Suprise
Thursday, February 12, 2009 11:03 p.m.

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Wisconsin motorists can, at least temporarily, look forward to lower gas prices after the Milwaukee federal court ruled Wednesday the state has been violating the Sherman Antitrust Act.

Since 1939, Wisconsin’s markup law has required gas stations tack on 9.18 percent over the average wholesale price of fuel in order to prevent companies from charging too little, resulting in a monopoly.

According to Bill Cosh, spokesperson for Attorney General J.B. Van Hollen, the Department of Justice will not be enforcing the markup law as long as the court’s ruling stands.

Attorney Jon Dibble of the Utah-based fuel company, J Flying, said they sued the state because the company felt Wisconsin law prevented fair competition among fuel providers.

“The state failed to supervise the scheme they put in place so it didn’t qualify as an exemption under the Sherman Act,” Dibble said. “Prices change and Wisconsin should have changed the minimum markup accordingly.”

Dibble added that because of the law, Wisconsin citizens have paid hundreds of millions of dollars more than they should have for generations.

Rudolph Randa, chief judge of the Eastern District of Wisconsin, agreed with J Flying when the suit was brought to court Wednesday, ruling the current markup law unconstitutional.

Gov. Jim Doyle agreed with the decision, bringing up examples from when he, as a district attorney, had to prosecute companies for selling products for too little when a similar markup law applied to all products.

“I think the jury members would say thank you,” Doyle said at a Thursday press conference. “I think it’s a good thing for the consumer of the state for the minimum mark up law [on gasoline] to go away.”

Various Republican lawmakers agreed with Doyle, releasing statements in favor of the ruling.

The Wisconsin Petroleum Marketers & Convenience Store Association, however, was disappointed in the ruling, and hopes the attorney general’s office will seek an appeal, according to a statement Wednesday.

The statement referenced similar lawsuits, saying time after time legislatures have found value in the law since it promotes competition and protects consumers

According to Cosh, the attorney general and DOJ are reviewing the case, but have not made any decisions about a possible appeal.

Dibble, however, sees the suit as nothing but a victory for Wisconsin citizens, since gas stations will now be able to sell gas at lower prices without fear of state prosecution.

According to Dibble, the mark-up has resulted in an additional 30 cents added to the recent price of gas.

“Why would they want to force the citizens of Wisconsin to pay higher gas prices? If they appeal, that’s what they’re doing,” Dibble said. “The statute was made to help the little guy stay in businesses, but the point is if a good efficient gas station can survive on 10 cents a gallon, then the 20 cents a gallon profit should go back to the public.”

3 Comments | Leave a comment

Anonymous | February 13, 2009 2:46 AM | Reply

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Anonymous | February 13, 2009 8:39 AM | Reply

FYI…the company is called Flying J, not J Flying.

Anonymous | February 17, 2009 9:20 AM | Reply

Since Judge Randa declared the minimum mark-up illegal, the price of gas has not dropped. In fact it has actually gone up a penny or so. Where’s the 30 cent / gallon drop in price we were promised?