Last updated on September 19th, 2016 at 12:00 pm
by Terrie Ellerbee/editor-Midwest
It is a fight that has gone on for two decades now, according to Wisconsin Grocers Association (WGA) President and CEO Brandon Scholz. The debate over whether to repeal the Unfair Sales Act is hotter in some years than others. This looks to be a hot one.
Wisconsin’s Unfair Sales Act or “minimum markup law,” as it is known, prohibits retailers from selling products below cost. The state says the practice of selling below cost to attract patronage is a form of deceptive advertising that diverts business from retailers who maintain a fair pricing policy, ultimately resulting in lessened competition and market disruption.
State Rep. Jim Ott (R-Mequon) and Sen. Leah Vukmir (R-Wauwatosa) want none of it. They introduced a bill last year to repeal the Unfair Sales Act. In an opinion piece in the Milwaukee Journal Sentinel, they argued that the law keeps prices “artificially high for consumers and businesses.” They say it “lacks rational basis and is an unnecessary intrusion into the private sector and the free market.”
It is important to note where Mequon and Wauwatosa are located. Wisconsin’s Unfair Sales Act is under fire from folks in the southeastern part of the state. That is where Meijer has entered Wisconsin with six locations. In June and August, it opened stores in Sussex and Waukesha, respectively. Last year, it opened locations in Grafton, Kenosha, Wauwatosa and Oak Creek.
Meijer almost immediately came under fire for allegedly selling products below cost.
Scholz sees the whole issue differently, and, frankly, he’s upset about yet another attempt to repeal the law. He half-jokingly referred to the those who introduced the bill to the state assembly and senate last year as “the forces of evil.”
This year, influential radio personality Charlie Sykes is hammering away on repealing the state law.
“Sykes is very much of a ‘we have to repeal this law. We need to have the free market. We shouldn’t have government sitting around setting prices,’ and this all this stuff,” Scholz said.
Scholz believes the lawmakers are “afraid not to co-sponsor” the bill because they don’t want Sykes calling them out on the air.
Last year, the WGA was successful in preventing a public hearing on the bill. Without that, it was “put back in the desk drawers of various committees,” Scholz said. “And there they sat all year. That was last session. There are some who say that when the bill is introduced again, it will be difficult not to have a public hearing. That’s entirely possible; we’re still going to fight to not have one, but it’s possible. That’s the path we’re on.”
He believes there are probably a dozen lawmakers who very much support repeal. There’s at least an equal number that are opposed.
“Another 30-some-odd lean our way,” he said. “It’s that battleground in the middle that we’re always conscious of. On the other side of the aisle, the democrats totally oppose repeal.”
The speaker of the house wants to see 52 votes to pass a bill, and Scholz doesn’t believe those wanting repeal have that many.
If the Unfair Sales Act is repealed, Scholz has no doubt that it will cause “significant” price wars. Shoppers will migrate to the lower prices, and then independent grocers will come under threat.
Repeal is a job killer, Scholz said. It will put hundreds of companies out of work, and, while it would be terrible to lose even one independent grocer, it isn’t just retailers that will close their doors.
“It’s all the collateral damage that will come. The warehouse supplier will lose business. That warehouse is going to take a huge hit, as is the secondary warehouse,” Scholz said. “All the DSD guys—so soft drinks, Coca-Cola, Pepsi, the water they deliver. All the bread guys, all the beer guys, all the chip people. Everybody that’s DSD now has lost an account. And it’s big money.
“But it doesn’t stop there. Let’s take a look at the folks in the community. The HVAC guy that comes in and works on the cooler, the electrician. Let’s talk about maybe they’ve got a cleaning company that comes in, the uniform company, those suppliers,” he said. “It’s the guy who plows the parking lot in the winter and the kid who cuts the grass in the summer. It’s the advertising in the newspaper and on radio and on TV. It’s the lawyer that they hire, the accountant, the payroll service that they hire. It’s the insurance agent. It is everybody that does business with that store.”
A lawsuit may prevent all of this from happening. The Wisconsin Institute for Law & Liberty has filed a lawsuit on behalf of Krist Oil and Robert Lotto challenging the constitutionality of the minimum markup law. If the lawsuit is still winding its way through the courts in January, the WGA will argue that there’s no reason to take it up.
*Editor’s note: This is part of the Wisconsin Market Profile, which appears in its entirety in the October 2016 print edition of The Shelby Report of the Midwest.
