April 24, 2017
The minimum markup law, which is formally called the Unfair Sales Act, generally prohibits selling goods below cost and considers the practice a form of deceptive advertising that reduces competition by drawing business away from retailers that price products fairly. For general merchandise and products like gasoline, tobacco, and alcohol, the minimum markup law uses formulas that increase the minimum cost of a product from 3 percent to 9.18 percent to cover part of the seller’s cost of doing business.
The arguments for and against the minimum markup law, which was enacted in 1939, generally pit large, national, retail chain stores against smaller, stand-alone or family-owned businesses.
Supporters of the minimum markup law, which include grocers, convenience stores, gas stations, cooperatives, and other small businesses claim the law prevents large retail chains from slashing prices below their costs in order to put small operations out of business and create a monopoly in which the survivor may increase prices as much as they choose.
Opponents of the minimum markup law argue it unfairly inflates prices paid by consumers and amounts to a form of government intervention that protects some businesses from the consequences of competing in a free market system.
The measure was introduced by GOP Sen. Leah Vukmir of Brookfield, and Reps. Jim Ott of Mequon, and Dave Murphy of Greenville. Republicans control both houses of the legislature by comfortable margins.
But the same bill introduced in the last legislative session by the same authors drew opposition from agriculture, business, and tourism interests, which contributed $3.8 million to Republican lawmakers, including $20,300 to Vukmir, $8,550 to Murphy, and $6,700 to Ott, between January 2011 and December 2016.
The only special interest on record as favoring the 2015 proposal was Wal-Mart. Republican lawmakers received about $114,900 from Wal-Mart employees and political action committees (PAC) between January 2011 and December 2016. Ott received $1,000 and Murphy and Vukmir received $500 each from Wal-Mart PACs during the period.