Safeway Sued for Selling Cheap Gas

Gas stations in the East Bay Area of Northern California are retaliating against Safeway for selling cheap gas and taking away business by bringing about what I consider a frivolous lawsuit.  The gas stations feel that Safeway’s “unlawful or unfair” pricing is having a detrimental effect on local gas stations.

Safeway offers a 3 cent discount off of every gallon for Safeway club members.  If customers missed out on this opportunity at the register, they can come back and show a clerk their receipt to get an additional discount–maxing at 10 cents/gallon.

The local gas stations are arguing that Safeway’s cheap gas prices are so reduced that Safeway is in violation of California law.  Thus, the local stations are demanding that Safeway pay them at least $100,000 in damages.

This suit seems absurd.  We live in a capitalistic society where businesses are encouraged to compete in the market place.  The caveat is that businesses should not engage in fraudulent or illegal conduct.  Are the local gas stations trying to show that Safeway is conducting itself unfairly because its gas prices are too cheap?  Isn’t Safeway entitled to sell cheap gas and be a competitive player in the market?

California Business & Professional Code §17200 (CAL BPC) defines unfair competition to include business practices that are unlawful, unfair, fraudulent, deceptive, untrue or misleading. What exactly “unfair” means is left for us to ponder.  It is no secret that the United States is a capitalistic society, where we encourage a plethora of business practices and ideas in the market place to keep competition alive and businesses thriving.  Therefore, the CAL BPC cannot prohibit businesses from implementing competitive strategies to bring in customers and increase business.  CAL BPC can be interpreted to have the intent to prohibit businesses from using illegal means to bring in clients, or mislead clients per deceptive tactics.

However, Safeway has neither implemented an illegal method nor have they misled their customers.  There is nothing wrong with offering cheap gas at a time where gas prices are going through the roof.  In fact, if Safeway has found a way to offer their customers cheap gas, other local gas stations should follow their lead.

Although California is a state with a majority of drivers, with rising gas prices, people are driving less, looking for alternate modes of transportation, or arranging carpools.  As a result, there will be less people coming to the gas station to fill up their tank.  This in turn affects local gas station businesses significantly.

Rather than trying to punish one of the sources of their decreased business, these gas stations should aim to lower gas prices or offer their customers some sort of incentive to fill up at their stations.  Furthermore, if they are complaining on losing business, then why are these businesses willing to spend money on litigation?  Litigation is not cheap.  Even if Safeway ends up settling, just the exchange of a few letters and settlement proceedings can be costly.  How much harm could this potential loss in business amount to if these gas stations have enough funds to go through litigation?

It seems as if these gas stations are trying to hassle corporate giant Safeway for money.  Perhaps this is a sign of what the economy has brought us too.  In a land where competition would bring about innovative ideas to compete in the market place, businesses are now choosing the easy way out by suing their competitors for money.  In other words, it seems like our economic recession has sucked the capitalist spirit out of America.  If we keep this up, our home, known as the land of opportunity to many, may be seen as the land of litigation.