Sam’s Club Accused of Dirty Gas Wars

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It’s hard enough to run your own small business, but the owners of some mom-and-pop gas stations argue that Sam’s Club is making their lives even harder.

Dozens of people who work at small independent gas stations in Bangor, Maine, have sent a petition to the state’s attorney general, alleging that Sam’s Club’s gas stations are deliberately trying to kill competition by selling gas below cost.

According to the Bangor Daily News, “The petition seeking an investigation brings to boil an issue that has been simmering all spring. Earlier this year, independent dealers raised concerns about a ‘price war,’ claiming that several of the larger dealers were selling gasoline at or below cost in an effort to put them out of business.”

While Maine does not have a law on the books regulating gas prices, those who signed the petition argue that Sam's Club could be in violation of another state law. The Daily News reports that Maine currently forbids companies from "selling merchandise at less than their cost with the intent to injure competitors or destroy competition."

This isn’t the first time that Sam’s Club has been accused of undercutting small businesses. Since launching fuel stations in the 1990s, Sam’s Club has stirred controversy in places like Baltimore for making their prices as much as 15 cents lower than other local gas stations. That’s great for consumers, but not for mom-and-pop retailers.

As the Daily News points out, many gas station owners in the town have engaged in price warfare with one another in the past, but none can afford to go as low as Sam’s Club can. The question is whether that’s because Sam’s Club is deliberately pricing gas below cost, or whether their low distribution overhead means they can afford to sell gas at cheaper prices and still make a profit.

Wal-Mart (Stock Quote: WMT), which owns Sam’s Club, has not yet responded to this complaint. But perhaps in the meantime, local business owners should copy Rob Baker’s strategy. When he realized he just could not make his gas prices any cheaper, Baker, a Bangor native, decided to put up a sign in the front of his store explaining what his bottom line is. He may not be able to beat Sam’s Club in prices, but Baker can at least try to beat them in the publicity department. He says he gets "positive responses" from the sign, despite his higher gas prices.

If you liked this, you’ll love MainStreet’s feature on whether the world would be better off without Wal-Mart.

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