According to the March 24th.Oil Express newsletter, a federal judge has ordered Sam’s Club to stop selling gas for below cost. The newsletter says that the court determined that Sam’s club had lost $250,000 to $300,000 on gas sales at three stores in Oklahoma City, Oklahoma, over an eight month period. Oklahoma’s Unfair Sales Act requires marketers to markup gas sales at least 6% over “laid-in costs”. The court case indicates that Sam’s gross margin was less than .6%. The judge in the case said Sam’s testimony on the numbers was “contrived”, and its pricing was “deceptive”. The company’s pricing policy caused a competitor to lose a large volume of its business. The court said that because Sam’s was not a free-standing gas station, “the purpose of the gasoline business at these three stores is to pull custmers in and to do so if need be by operating the gas facilities at a loss.” The Oklahoma Petroleum Marketers hailed the court decision as a “great victory for law-abiding marketers” in the state. “The court found that selling gasoline at a loss in order to lure customers to buy other merchandise is deceptive and impairs fair competition,” the OPMA said.
Earlier this week I was at a Sam’s Club hearing in Seabrook, New Hampshire opposing a gas station variance filed by Sam’s. The engineer representing Sam’s at the hearing said that the company was not in the business of putting other people out of business. In this Oklahoma case, however, Sam’s pricing policy made a Shell station retailer in the area look like it was “price gouging”, causing the Shell retailer major losses. It turns out that Sam’s was selling gas at an illegal price that the Shell could not match.
Earlier this week I was at a Sam’s Club hearing in Seabrook, New Hampshire opposing a gas station variance filed by Sam’s. The engineer representing Sam’s at the hearing said that the company was not in the business of putting other people out of business. In this Oklahoma case, however, Sam’s pricing policy made a Shell station retailer in the area look like it was “price gouging”, causing the Shell retailer major losses. It turns out that Sam’s was selling gas at an illegal price that the Shell could not match.
