Suit challenges Wisconsin's minimum markup law
An oil company has filed a lawsuit challenging a Wisconsin law that bars companies from selling products below cost.
The Krist Oil Co. and a Wisconsin consumer filed the suit with the aid of a nonprofit group called the Wisconsin Institute for Law and Liberty, report NPR, the Wisconsin State Journal and WisBusiness.com. The suit (PDF) claims the law violates state constitutional guarantees to equal protection and due process.
The suit challenges Wisconsin’s Unfair Sales Act, which is also known as the minimum markup law. The act generally bars the sale of merchandise at less than cost “with the intent or effect of inducing the purchase of other merchandise or of unfairly diverting sales from a competitor.” For gas retailers, the law requires a minimum markup of 6 percent above the invoice or replacement cost, or a markup of 9.18 percent over the average posted price at the nearest product terminal where retailers can obtain gas.
The intent of the law is to prevent predatory pricing by large retailers to drive smaller rivals out of business. But the law is unlikely to achieve the benefits it seeks, and imposes restrictions on the right to earn a living and the liberty of businesses, according to the lawsuit.
“It is irrational to force higher prices now to protect against future higher prices that are highly unlikely to occur,” the suit says. Even if the ban on sales below costs were appropriate, the additional markup for sales of gasoline is not, according to the suit.
A previous challenge to the Wisconsin law had claimed it promoted an unlawful restraint of trade in violation of federal antitrust laws and was pre-empted under the supremacy clause, according to the press release by the Wisconsin Institute for Law & Liberty. The Chicago-based 7th U.S. Circuit Court of Appeals ruled the state statute was not pre-empted in Flying J v. Van Hollen.
In another case, Bhandari v. Nilsestuen, the Wisconsin Court of Appeals ruled the law did not violate equal protection provisions of the state constitution, but did not rule on due process, one of the claims in the new case, the press release says.
The new case is Krist Oil Co. v. Wisconsin.
