Two state lawmakers will introduce legislation to amend Colorado’s Unfair Practices Act to allow retailers to sell gasoline, drugs and other products below cost.
Attorney General John Suthers’ office is drafting the legislation, which will be introduced by Sen. Steve Johnson, R-Fort Collins, and Rep. Cheri Jahn, D-Wheat Ridge.
The announcement comes a month after a jury found that King Soopers and City Market violated Colorado’s Unfair Practices Act and illegally sold gas below cost. While only the Kroger chain, which operates King Soopers and City Market stores, was named in the ruling, it applies to all grocery and big-box retailers selling discounted gas in Colorado.
Weeks later, Wal-Mart and Target announced a discount drug program that lowered the price of some generic prescriptions to $4. But the chains said that, because of the law, they would charge $9 for certain generics, more than double the charge in states that don’t have similar legislation.
Colorado’s 1937 law is outdated and deprives consumers of low prices, Suthers said at a news conference Monday to announce the proposed legislation.
“The government should only interfere in consumer pricing to assure a competitive marketplace,” he said.
Suthers said the measure will continue to protect consumers against monopolistic behavior. The legislation would amend the act to ensure that those who use unfair pricing to try to monopolize a market are prosecuted.
If big-box retailers can sell below a commodity’s cost, they could drive smaller competitors who can’t afford to offer similar discounts out of business, said Roy Turner, executive vice president of the Colorado Wyoming Petroleum Marketers and Convenience Store Association. He said he hasn’t seen the proposed legislation, which is still being written.
“If it is made so difficult that if you are facing unfair competition, to prove that in a court of law, you are going to see a number of Colorado-based businesses go out of business,” he said.
Some independent pharmacists also are concerned that allowing deep discounts could hurt their business, said Brad Young, director of governmental relations for Rx Plus, an association that represents independent pharmacies in Colorado and seven other states.
Other members believe the discounts aren’t enough to peel customers away from the more personalized service they can get from independent pharmacists, he said.
Two independent gasoline dealers in Montrose were awarded $1.4 million on claims that the City Market in town sold gas below cost from December 2003 to April 2005. Turner’s organization supported the dealers in their suit.
Colorado and about 10 other states prohibit retailers from selling gasoline below cost if it has the effect of harming competitors. About 30 other states have more-general unfair-practices laws.
Attorneys general in other states with laws similar to Colorado’s are working to loosen them, Suthers said.
Staff writer Tom McGhee can be reached at 303-954-1671 or tmcghee@denverpost.com.
THE ISSUE IN COLORADO
Gasoline: Grocery chains King Soopers and City Market were found in violation of state law for selling gasoline below cost, which smaller merchants say is an unfair practice. The ruling applies to all big-box discounters.
Prescriptions: Wal-Mart and Target say they must charge $9 for certain generic drugs, instead of their advertised $4, because of the Colorado consumer- protection law.
