GIANT EAGLE FUEL PROGRAM RULED OK

Julie Gallagher

PITTSBURGH -- The Pennsylvania Attorney General ruled on Sept. 1 that the fuelperks! fuel rewards program operated by Giant Eagle here does not violate the state's Unfair Sales Act.

As part of the fuelperks! program, every $50 spent with Giant Eagle's Advantage Card at a participating Giant Eagle store earns customers a 10-cent discount on each gallon of gas purchased at 80 GetGo stations, located at Giant Eagle stores and stand-alone outlets. Some shoppers become eligible to fill up their gas tank for free.

The program's popularity has spiked with the soaring price of gas at the pump. (See "Gas Prices Spark Rise in Promos Tied to POS," SN, Aug. 29, 2005, Page 34).

The Petroleum Retailers & Auto Repair Association (PRARA) here sought a decision about the legality of Giant Eagle's program in March, saying it violated the Unfair Sales Act. The law, applicable in 31 states, prohibits selling merchandise "at cost or less than cost in order to attract patronage." PRARA also cited its members' inability to compete with Giant Eagle's fuel discounts.

"It was determined that Giant Eagle is not selling fuel below cost because the supermarket eats the [fuel discount]," said Barbara Petito, deputy press secretary, Pennsylvania Attorney General's office. "It's not deemed an illegal business practice since [Giant Eagle] paid the full rate for the fuel."

"Giant Eagle has consistently maintained the legality of its fuelperks! program and is pleased that the Attorney General agrees," Giant Eagle said in a statement. "With the rising costs of fuel, thousands of customers continue to tell us every day how much they appreciate the fuelperks! program."

PRARA contends that because fuelperks! eliminates competition it will drive up fuel prices in the long term. Some of its independent fuel provider members have been forced to close their business as a result of the program, according to Nancy Maricondi, executive director, PRARA.

"We thought that the Attorney General was small-business-friendly and that we'd get a fair judgment," Maricondi said. "Pennsylvania's Unfair Sales Act is designed to prevent predatory pricing and the anti-competitive effects that flow from below-cost pricing."