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Court Strikes Down Wisconsin Law Regulating Fuel Prices

February 27, 2009

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You may see fuel prices drop in Wisconsin after a court overturned a law that was designed to prevent unfair price cutting among fuel sellers.


According to the American Trucking Associations' State Laws Newsletter, the U.S. District Court for the Eastern District of Wisconsin has held that the Wisconsin Unfair Sales Act was unconstitutional as applied to sales of motor fuel.

The law effectively required motor fuel retailers to sell at a price no lower than the terminal price plus a markup of 9.18 percent. In earlier years, such a markup amounted to a few cents, but when gasoline and diesel exceeded $4 a gallon, the markup came to more than 30 cents a gallon, far more than a comfortable profit margin for many retailers.

Flying J challenged the law under Section 1 of the Sherman Act, the federal anti-trust statute, as restraint of trade. The court agreed that the state law "authorizes and enforces resale price maintenance among competitors," an anti-trust violation.

It made no difference, the court continued, that there was no "concerted action" among competitors here, and that the pricing scheme was the result of a state law. "Where private actors are granted 'a degree of private regulatory power,' the regulatory scheme may be attacked."

The court accepted evidence that the Wisconsin law did in fact keep fuel prices higher than they would otherwise have been.

The court issued the requested injunction against enforcement of the act.

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