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Gas discount fuels flames of legal debate

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Photo by Dan Lassiter

LaKeta Benedict of Evansville pumps gas at the Woodman's gas station. The grocery store offers customers a discount at the pump if they present a same-day receipt from the grocery store.

Photo

Photo by Dan Lassiter

LaKeta Benedict shows her Woodman's sales receipt that saved her 3 cents a gallon on a fill up at the Woodman's Gas Station.

JANESVILLE — Wisconsin's so-called minimum markup law still is in legal limbo, but that isn't stopping a local company from taking advantage of a ruling striking the law down.

Woodman's started offering a discount on gasoline with the purchase of groceries about a month ago, even though an appeal seeking to reinstate the law is pending.

"We're definitely against the law and hope that it never gets put back into place," Vice President Clint Woodman said.

The minimum markup law requires retailers to sell gas at 9 percent above cost and has been a source of controversy for years among gas retailers and lawmakers. The law was created to prevent larger retailers from driving small retailers out of business by undercutting their prices.

A federal judge declared the law unconstitutional in February, but the Wisconsin Petroleum Marketers & Convenience Store Association appealed the ruling.

It's unclear if the law still is in effect during the appeal process, but the state doesn't plan to prosecute companies that violate the law while the appeal is pending, said Janet Jenkins, administrator with the Wisconsin Department of Agriculture, Trade and Consumer Protection.

The state will continue to prosecute cases where companies sell gas below cost, which remains illegal, she said.

That was all Woodman's needed to hear, Clint Woodman said. The grocery chain now offers customers a discount of 3 cents a gallon on gas at Woodman's stations with a grocery receipt from the same day.

Woodman's first offered the program a few years ago but had to discontinue it because it violated the minimum markup law. Instead, Woodman's offered a more complicated discount requiring customers to buy a certain amount of groceries before receiving a certain discount on gas.

"This program (is) so much easier," Woodman said.

The group appealing the ruling says striking down the law will encourage "predatory pricing," according to a release on the group's Web site. Ultimately, consumers will have fewer choices and pay more for gas, the release says.

But Woodman said the minimum markup law does the opposite of what it intended. Because larger companies couldn't offer discounts on gas, they started offering rebates through credit card programs, he said. Smaller retailers, especially those such as Woodman's that don't accept credit cards, can't afford to do that.

"To stay competitive, we have to be able to give those rebates on gas," he said.

Woodman believes the law's repeal ultimately will benefit consumers.

"Once it's put out that the law is actually repealed, I think you'll see prices on gasoline go lower," he said.