Grand Junction Sentinel Editorial

3/27/07

      Below-cost grocery store discounts on gasoline will return to Colorado if Gov. Bill Ritter signs a bill designed to overturn an archaic, Depression-era state law.

      Ritter should sign House Bill 1208 and end the outdated law that applies only to gasoline.

      Readers may recall that the practice by large grocery retailers of selling gasoline to their regular customers at a few cents per gallon below cost was halted last year after two independent gas retailers in Montrose sued. A judge ruled the practice was illegal, based on the 1930s law.

      HB 1208 was introduced this year to overturn the old law and quickly passed the House. As Colorado Attorney General John Suthers noted, there is little reason for the law. Using below-cost sales and other tactics in an attempt to drive competitors out of business and create a monopoly is prohibited under anti-trust laws. That will remain illegal, even if HB 1208 becomes law.

      Furthermore, retailers routinely use below-cost sales on many items — often called loss leaders — to attract customers to their businesses. Why should gasoline be the exception?

      When HB 1208 reached the Senate, however, it was amended by Hesperus Democrat Sen. Jim Isgar to maintain the prohibition on below-cost sales in counties with populations under 200,000 — meaning every place in Colorado with the exception of a few Front Range metro counties.

      But Isgar’s amendment was so broadly worded that it would have applied not just to gasoline but virtually any retail item. It would have meant an end to two-for-one sales and many other pricing promotions in less-populated counties.

      Fortunately, Isgar’s amendment was stricken from the bill before it passed the Senate last week.

      However, Isgar said he now fears that grocery stores may raise prices on food to make up for money lost on gasoline discounts.

      That’s unlikely, since the gas discounts are aimed at attracting customers into stores and raising prices would simply turn many of them away. But even if it were true, so what? Customers have many choices with respect to grocery purchases.

      The Legislature has no business trying to micromanage retail businesses by dictating what prices they may or may not charge.

      House Bill 1208 should be signed into law, and quickly.