On Thursday Aug. 20, it was announced that an appellate court will rule as to whether Wisconsin’s minimum markup law is constitutional. This comes on the heels of a ruling by Judge Rudolph Randa last February stating the law was unconstitutional and in violation of the federal Sherman Act.

The Sherman Anti-Trust Act was passed in 1890 and prohibits business practices, as well as laws, that prevent or hinder competition. One of the earliest examples of the Sherman Act’s application was its use by Theodore Roosevelt to break up the Northern Securities Company. A large part of the law also focuses on the prevention of monopolies.

Judge Randa’s ruling is based around the presumption that Wisconsin’s minimum markup law hinders competition because it forces all gas stations to maintain a standard. All gas retailers in Wisconsin are required to sell their gas for 9.18 percent more than the cost to purchase it.

This thinking seems to have some validity. By forcing all gas stations to maintain a set price, the stations power to price competitively is eliminated. If individual stations lose their ability to control their own price, the law does seem to violate the Sherman Act.

Another aspect of the Sherman Anti-Trust Act, however, is the importance of its restrictions on monopolies. Section II of the Sherman Act states, “Every person who shall monopolize, or attempt to monopolize … any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a felony.”

It’s important to analyze another aspect of thinking concerning the minimum markup law. By creating a floor to regulate the sale of gas, companies are prevented from forming a monopoly.

Say for example, companies A and B sell gas in an area. Company A has sufficiently more resources than company B, and can afford to sell gas for far under the price paid. Because of this, company B would be unable to compete with company A’s business practices.

Over time, company B would be driven out of business and at that point company A would be the only seller of gas in the area. Thus, company A would have driven B out and created a monopoly on gas.

Therefore, the minimum markup law would prevent situations like this from happening, encouraging competition between various retailers. In this sense, the law would help to coincide with the Sherman act.

It seems more likely that the minimum markup law prevents more damage than it causes. It could easily be argued that the law is unnecessary as the Sherman Act would be used to break up monopolies should they occur.

But by using the law to maintain a healthy business landscape for Wisconsin gas retailers, the difficulties of applying the Sherman Act and attempting to revitalize business is altogether avoided.

Another interesting aspect of the law’s debate is the appealing party. Attorney General J.B. Van Hollen chose not to appeal, but the Wisconsin Petroleum Marketers and Convenience Store Association did.

WPMCA believes the minimum markup law to be an integral aspect of Wisconsin’s gas sales. They state on their website that by having a minimum markup, all gas stations are able to compete at a price where some profit is still made.

For example, without the law, gas stations that can make more money off of “non-gas” or convenience store items can drive down the cost of gas. This greatly hurts other stations which rely more heavily on their direct gas sales. In instances such as these, the minimum markup helps to encourage fair trade practices.

Finally, it is integral to remember the minimum markup law was never a steadfast standard. The minimum markup law is a part of the Wisconsin Unfair Sales Act. This fact opens up an exception to markup rule.

Under the law, if a retailer lowers his price out of good faith to competitively meet the price of another retailer, it is not in violation of the law. This tenet can apply in many ways. One common example is border cities that often lower their prices to meet those of stations in nearby states.

Overall, the minimum markup law has been an important part of Wisconsin’s business law, and its reinstatement would help allow for competition as well as profits boosts for the retailers struggling in the law’s absence. With unemployment rates high, cutting away at our businesses profits seems unnecessarily detrimental.

Dan Rose ([email protected]) is a sophomore majoring in journalism.