Below Cost Selling

New Jersey currently has laws which prohibit the sale of gasoline below cost. These laws are absolutely essential to maintaining a functioning marketplace in the state.

Any elimination of these laws would allow big box chains to undercut smaller retailers and force these small businesses to close down. Once the competition is eliminated these chains would be able to dramatically increase gasoline prices on the consumer.

The current statute prohibiting below cost selling has been in place for decades and it was passed to prevent oil companies and large operators from driving smaller independents out of business. NJGCA opposes attempts to limit or eliminate New Jersey’s prohibition on below cost selling.

Click here to read a scientific study showing states with Below Cost Selling Laws on average have lower gas prices.

Rebates for Gasoline Purchases

New Jersey had long prohibited big corporations from providing rebates for gasoline or other forms of giveaways. This dated back to the days when big oil companies were forcing small independent dealers to bear the cost of various promotions they would think up and then give away to customers. In 2010-2011 there was a push to change this law.

NJGCA feared that this bill (A-3133 of the 214th Legislature) as originally written would have cleared the path for backdoor below cost selling by letting big businesses use giveaways to force gas retailers to sell below cost.

NJGCA and our allies the Fuel Merchants were finally able to successfully broker a compromise with the organization representing the grocery stores and Assemblywoman Celeste Riley (D-Cumberland), who was the sponsor of the bill. Unlike the original bill, the emphasis was shifted from the gasoline retailer to the company offering the promotion. That means that the corporation (be it a supermarket, oil company, or other retailer) offering the reward must be the one to pay for the reward, not the gasoline retailer.

NJGCA opposes gas retailers being forced to pay for another company’s promotion out of their already small profit margin. Since this law has gone into effect in January 2012, we have heard reports that certain promotions are using loopholes in the law to require stations to to pay some of the cost associated with the promotion. NJGCA is currently working with legislators on a solution to this issue, so stay tuned.

Click on the next page to view legislative information on this issue

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