Court Reinstates Minimum Mark Up Law on Gas

Move Forces Retailers to Increase Price of Gas by at least 9.18 Percent Over Wholesale

MacIver News Service | September 3, 2010

[Madison, Wisc…] A federal court ruling Friday could lead to higher gasoline prices in Wisconsin.

The 7th Circuit Court of Appeals’ ruling effectively reinstates Wisconsin’s minimum markup law on gasoline, which mandated that retailers sell gas for six percent above what they paid for the product, or 9.18 percent above the average local wholesale price, whichever is higher.

Wisconsin passed the law, officially titled the Unfair Sales Act, in 1939. In its original form, the Act mandated a 3 percent markup at wholesale and a 6 percent markup at retail on all merchandise sold in Wisconsin, including gasoline. The Act remained basically unchanged until 1986 when the Wisconsin Legislature removed the minimum markup provisions for all goods except tobacco, alcoholic beverages and motor vehicle fuel.

In an earlierĀ  ruling in this case delivered in February of last year, U.S. District Judge Rudolph Randa concluded the Minimum Markup law violated federal antitrust law and increased the price at the pump.

The Wisconsin Petroleum Marketers and Convenience Store Association intervened to appeal the ruling after Republican Attorney General J.B. Van Hollen and Democrat Governor Jim Doyle agreed that the state would not.

In overturning Randa’s decision, the Appeals Court wrote:

The statute neither requires nor authorizes gasoline dealers to get together and agree on what price they will all charge for gasoline. Nor does the statute require or authorize wholesalers to get together to decide what prices they will charge at the terminal. On the face of the statute, there is simply nothing that compels collusive private conduct that would violate the Sherman Act.