Repeal our state’s minimum markup law

By State Sen. Leah Vukmir & State Rep. Jim Ott

Southeastern Wisconsinites are flocking to the newly opened Meijer grocery stores to shop their remarkable deals. This phenomenon has led to complaints against Meijer for allegedly selling its goods for prices that are below cost — a practice that is currently against state law.

It’s time we take a closer look at Wisconsin’s Unfair Sales Act, called the minimum markup law, that mandates general merchandise may not be sold at less than cost by retailers and wholesalers.  Passed more than 75 years ago, the Unfair Sales Act keeps prices artificially high for consumers and businesses. The law also requires that sellers include a gross profit markup on certain products, most notably gasoline, regardless of whether the product is sold above cost.

The Unfair Sales Act gives government bureaucrats, rather than business owners, the ability to control product prices.  These higher prices hurt consumers, and businesses are often forced to pay stiff fines or face the possibility of litigation as a consequence of violating the law.

Opponents of the repeal of the minimum markup law assert that many small business owners will likely be forced to close. There is no evidence this would actually happen.  Wisconsin remains one of only a handful of states where such a law exists. Other Midwestern states, such as Iowa and Illinois, permit businesses to sell goods below cost, and small businesses still thrive. Rather than let the free market reign, opponents of the repeal prefer to inhibit competitors from being too competitive.

Furthermore, supporters of the archaic Unfair Sales Act claim that selling a product below cost is ‘unfair competition’ that would lead to uncompetitive pricing. In fact, the existence of below-cost pricing is an indication of a strong, competitive marketplace that has the best interest of the consumer in mind. Today’s consumers can easily tap into interstate online commerce websites — Amazon, for example — and have more choices than ever when it comes to price. Currently, Wisconsin-based businesses are banned from legally selling items at below-cost prices and are unable to provide full discounts, placing these businesses at a competitive disadvantage.

For instance, on Black Friday, Wisconsin consumers are often prohibited from purchasing nationwide doorbuster deals because businesses must comply with this illogical law.   Consumers may take notice that stores insert exceptions in their advertising fliers. Because Wisconsin businesses are banned from legally selling the item for the national doorbuster price, consumers are likely to spend their money across state lines or simply purchase products online.  This is not only inconvenient for Wisconsin residents, but also results in lost tax revenue to our state.

Allowing businesses to function freely while allowing consumers to purchase goods at the best possible prices is common sense. The Unfair Sales Act lacks rational basis and is an unnecessary intrusion into the private sector and the free market.  It is not the role of government to impose an artificial price on consumer goods.

In the coming weeks, we look forward to introducing legislation that will repeal the state’s Unfair Sales Act. We’re confident our legislative colleagues will support this commonsense repeal.  It’s long overdue.