Costco claimed a legal victory on Tuesday when the U.S. Court of Appeals for the Seventh District agreed that the warehouse retailer did not violate the Wisconsin Unfair Sales Act involving gas prices.
A dozen gas station owners in the Green Bay area claimed Costco sold gas below state-mandated minimum prices for years, negatively impacting their businesses.
Specifically, the gas stations were challenging the Bellevue, Wis., Costco’s claim that a BP gas station in Kaukauna, Wis., located 24 miles away, and two Marathon stations in the Green Bay area where customers could use reward points to save five cents a gallon were legitimate competitors as defined under state law.
Costco argued that 500 of its members lived in Kaukauna, making it a legitimate competitor. The court agreed, stating, “Gasoline is a product for which consumers can [and will] travel some distance. More broadly, the point is that we must attend not only to the geography, but also to the specific characteristics of the product being offered and the customers to whom it is being offered, among other practical considerations.”
Regarding the two Marathon locations, the gas station owners said Costco should not have priced its gas to match the Marathon price given to reward members. The District Court disagreed and said the text of the Wisconsin Unfair Sales Act does not restrict a retailer from matching the posted price of its competitors.
“The terms are broad enough to allow for the matching of any price offered to a buyer, whether that price is advertised or not,” the court said.
The three-judge appellate panel of the Seventh Circuit also ruled the group of gas stations did not provide enough evidence showing a link to any damage or harm.
The Green Bay gas stations needed to show that Costco’s pricing practices were a substantial factor in causing their lost profits. The group brought in experts who testified that Costco’s prices would or could cause injury, and they also used terms like “general observation” and “to a reasonable degree of certainty.”
It was not enough for the court, which said, “In the absence of any rigorous market or economic analysis, the testimony upon which the Green Bay stations rely amounts to little more than ‘sheer speculation.’”
