Wisconsin law raises gas prices, lawsuit claims

A Northwoods gas station chain must sell fuel at undisclosed higher prices at its Wisconsin locations than at its Michigan locations, the retailer is arguing in a lawsuit against the state law it says is responsible for the added costs.

A conservative law firm is bringing the lawsuit on behalf of Krist Oil, which hopes to strike down Wisconsin's controversial law requiring a minimum markup on some retail goods such as gasoline.

The Wisconsin Institute for Law & Liberty isn’t disclosing who’s paying for the lawsuit, which could widely impact both consumers and retailers around the state.

WILL leader Rick Esenberg said that though his firm receives money from the Walton Family Foundation, the money from the founding family of Wal-Mart is not being used for this lawsuit, which could benefit the low-price giant.

“We’ve had no conversations with them about this at all,” said Esenberg, adding that the Walton funding is used for work concerning private and charter schools.

WILL brought the lawsuit at no cost for Krist Oil in the circuit court of rural Northwoods Vilas County, which lies on the border between Wisconsin and Michigan. That venue was made possible by a 2011 measure that allowed plaintiffs to challenge state laws and actions in any county circuit court. Previously, all such lawsuits were brought in Dane County court.

A spokesman for GOP Attorney General Brad Schimel said the Department of Justice was reviewing the lawsuit.

The markup law says retailers must mark up the price of alcohol, gasoline and cigarettes over the store's cost and retailers cannot sell other products to consumers at prices below what it cost the stores to buy them.

Supporters say the 1939 law protects small businesses from giants like Wal-Mart that might seek to sell some products at a loss to get more business or drive out competitors. Opponents say it's an outdated measure that forces consumers to pay higher prices to protect businesses from a threat that may not even be serious.

State merchant groups such as the Wisconsin Grocers Association largely support the law. Grocers head Brandon Scholz said that removing the law would lead to price wars and stores going out of business.

"Ultimately the people who support this lawsuit want to get rid of the competition," Scholz said.

Under the law, retailers must mark up the price of gas by 6% over certain costs or 9.18% over the average wholesale price, whichever is greater. But the law lets stations lower their gas prices to meet competitors' prices — a practice that supporters of the law say happens routinely and serves to blunt its effects.

WILL spokesman Cameron Sholty said Krist Oil sells its gasoline for average of 5 cents to 10 cents more per gallon in Wisconsin than in Michigan for a variety of reasons. At the moment, gasoline is actually selling more cheaply at Wisconsin locations because of summer vacation demand in Michigan tourist destinations, Sholty said.

Krist has been a target of minimum markup investigations by state officials.

Esenberg said he could not yet document his contention — one disputed by the law's supporters — that the markup has not helped more small stores thrive in Wisconsin as opposed to other states without such a requirement.

WILL is basing its challenge on a broad section in the introduction of the Wisconsin constitution that guarantees citizens’ inherent rights to “life, liberty and the pursuit of happiness.”

Courts have interpreted that phrase to guarantee citizens’ freedom to make a living, said Esenberg, who did not cite specific cases.