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Monday, April 25, 2011

Safeway Sued for Selling Cheaper Gasoline

Posted By on Mon, Apr 25, 2011 at 10:27 AM

click to enlarge Okay, so it's not THAT cheap
  • Okay, so it's not THAT cheap

The price at the pump could get even pricier -- but only at your local Safeway store.

An Alameda County judge has "hinted" that he will block Safeway stores from offering cheaper gasoline to their Club Card members and loyal shoppers across the Bay Area. And you can thank the surrounding fuel stations for that.

A group of local filling stations filed a lawsuit against Safeway, claiming the big chain grocer was offering cheaper fuel and putting other stations are making it harder to lure broke-ass drivers to their pumps.

The lawsuit was first filed in 2008 by Dixon Gas Club, which claimed Safeway was violating the California Unfair Practices Act by offering promotional discounts through its grocery rewards card and Club Card programs. The Club Card promotion gives Safeway customers a .03 percent discount on fuel and the Grocery Rewards Program gives shoppers a discount on gasoline depending on how much they spent on groceries.

That sounds fair ... if you are a Safeway shopper. However, Alameda Superior Court Judge Wynne Carvill said an internal document

describing Safeway's pricing strategy proves that  that the

store's policies are harming local gas stations.

"It is clear that those who developed defendant's discount programs

believed the 3¢/gal. discount on the Club Card would generate additional

volume and do so by diverting sales from, among others, its single

product competitors -- including those like plaintiff who compete on

price and are often smaller market participants," Carvill wrote.

Jim Dombroski, the attorney representing the gas stations, says he is looking forward to Carvill ordering a preliminary injunction later this month. "Unfortunately, the perception is that the public generally just wants

the cheapest gas available, they don't care if it's sold below cost or

not," he told Courthouse News.

And although he is correct about that, Dombroski makes another good point: If Safeway can run all other gas stations out of town, then it can ultimately control the price of fuel, and that's never a good thing.

"That's where the consumer gets hurt," he said.

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About The Author

Erin Sherbert

Erin Sherbert

Bio:
Erin Sherbert has been Online News Editor for SF Weekly since 2010. She's a Texas native and has a closet full of cowboy boots to prove it.

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