Safeway cannot sell gas below cost, however court order won’t
affect current prices
Hollister – After more than a year in the court system, Dassel’s Petroleum Inc. earned a victory in their David versus Goliath lawsuit against retail giant Safeway when a judge ruled the grocery store cannot sell gas below cost with the intent to harm its competitors.
However, Safeway’s attorneys claim the order is moot because the company never participated in predatory pricing and has been in compliance with state law from the get-go.
San Benito County Superior Court Judge Harry Tobias issued a preliminary ruling Monday in support of a court order prohibiting Safeway in San Benito County from selling regular gasoline to the public at prices below what they bought it for, directly attempting to harm their competitors.
The court order, called a preliminary injunction, will be in effect until the case goes to trial, which could be at least a year off, according to Dassel’s attorney Gavin Kogan. However, Safeway is currently not selling gas below price so the court order will not affect gas prices or customers’ ability to utilize Safeway’s 3-cent discount card, he said.
“Safeway alleged this was over spilled milk, that it was all about money,” Kogan said. “But in fact it’s about leveling the playing field so other competitors not as strong as Dassel’s will be able to co-exist.”
Kogan said his clients will be asking for damages, however he declined to attach a price tag to the suit at this time because it is ongoing.
Dassel’s claimed in its lawsuit, filed in April 2004, that Safeway was selling gas for less than they bought it for, which was pushing out the local competition. Tobias sealed Safeway’s financial records, so it is unknown how much Safeway was selling its gas for. But Kogan believes the judge’s ruling validates Dassel’s claims that the company was in fact violating California’s Unfair Business Practices Act by undercutting its gas prices.
“There was no way Safeway was selling gasoline and making a profit,” Kogan said. “In fact, it was losing money.”
But Safeway’s attorneys insist Safeway never participated in predatory pricing and never broke the law.
“Safeway has never been in position of harming the competition but simply is making sure the people of Hollister can buy gasoline at the lowest prices,” said Safeway attorney John Makin.
Makin said although Safeway may have sold gas below price at one time or another, it’s not illegal to do that. It is simply a component of staying competitive in a fiercely competitive market, Makin said.
But Kogan, who believes Safeway was selling below cost since it moved to the area in 2002, said the company reduced its prices to lure customers away from the smaller, independently-owned stations, and over the years slowly increased prices once it had a strong customer base in the community. He said the company’s actions over the years was evidence to show it was breaking the law and participating in predatory pricing.
“Once the competition’s gone they can jack up their prices and gauge customers. They slowly increase their prices to capture back their losses,” Kogan said. “But the main focus for us has been to level the playing field so the little guys could remain somewhat competitive.”
Dassel’s co-owner Graham Mackie said although the case has been long and drawn-out, more so than he ever imagined it would be, Tobias’ decision was worth the time and money spent.
“We finally achieved what we were trying to achieve. We asked for an injunction and we got what we asked for,” Mackie said. “I’m not jumping up and down for joy, I’m just glad the court made a decision and we can move on. It’s in our favor, but it’s something they should have done in the first place.”
