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Court curbs gas discount

Posted by Richard on November 9, 2006

A U.S. District Court ruled that Colorado grocer King Soopers (a division of Kroger) broke the law by selling gas too cheaply. The court ordered King Soopers to stop offering a ten-cent per gallon discount on gasoline because it’s not fair to other retailers:

The ruling is the result of a lawsuit filed by two independent gasoline dealers in Montrose, Parish Oil Co. and Ray Moore Tire & Petroleum Service Inc., who said the grocers had been illegally selling gas below cost, a violation of Colorado’s Unfair Practices Act.

King Soopers, in a press release, said they felt their program complied with the law but added that they will immediately change their program to abide by the court’s decision. The program was pulled at midnight.

However, King Soopers plans to appeal the ruling.

"We disagree with the ruling. That promotion was to increase grocery sales, not to increase fuel sales," said Trail Daugherty, spokesperson for King Soopers.

To get the discount, you had to reach $100 in grocery purchases on your King Soopers card. When you subsequently swiped your card at the pump, the price rolled back ten cents. That’s how I bought gas for just two bucks the other day.

The King Soopers card is good for a 3-cent discount without the qualifying grocery purchases, and that discount isn’t affected by the ruling. That tells us something interesting: King Sooper’s retail markup on a gallon of gas is between 3 and 10 cents.
 

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