Piece reviews how current 9.18% mandatory markup law harms Wisconsin
consumers, makes scofflaws of retailers like Krist Oil who want to
offer competitive pricing, bargains
January 29, 2018 – Milwaukee, WI – On Friday, WILL
Executive Vice President CJ Szafir and Americans for Tax Reform’s
Director of State Affairs Patrick Gleason had an opinion piece appear in
The Wall Street Journal. The op-ed, “
These Prices Are a Steal—and in Some States, That’s Illegal,”
explains the history of the law and how it’s mandatory 9.18% price
markup on products like gasoline, tobacco, and alcohol harms Wisconsin’s
consumers.
The law, a vestige of the Great Depression, also prohibits below-cost
sales of all goods sold in Wisconsin, ostensibly to prevent large
retailers from monopolizing the market. However, both federal and state
antitrust laws prohibit predatory pricing separate of Wisconsin’s
minimum markup law. The antiquated law does not allow Wisconsin
consumers to benefit from popular sales like Black Friday in the way
that consumers from Illinois, Michigan, or Iowa may.
In May of last year, the Wisconsin Institute for Law & Liberty
released
a report from Dr. Will Flanders, WILL Research Director, and Dr. Ike
Brannon, a visiting fellow at Washington, DC’s Cato Institute that
clearly showed there was no causal relationship between Wisconsin’s law
and the number of gasoline retailers in the state. The report debunked
that claim which is often asserted by supporters of the law like the
special interest groups Wisconsin’s Petroleum Marketers and Convenience
Stores Association and the Wisconsin Grocers Association.
That report coincides with a lawsuit by Krist Oil that is challenging
the constitutionality of Wisconsin’s Unfair Sales Act. You can learn
more about that lawsuit
here.
The entire Szafir/Gleason op-ed is available
here and a shortened version is below.
These Prices Are a Steal—and in Some States, That’s Illegal
When Meijer opened two stores in Wisconsin, the state demanded it charge more for dog food.
Are low prices putting your family at risk? Believe it or not, some
regulators seem to think so.
Twenty-six U.S. states still have a
“minimum markup” law, a relic of Depression-era economics that prevents
businesses from charging less.
In Wisconsin, the price police have gone after Meijer, a superstore
that sells everything from groceries to electronics to pharmaceuticals.
In 2015, when it opened its first two stores in the Badger State, the
greeting Meijer received was far from “Wisconsin nice.” Rivals filed
complaints accusing it of pricing 37 items—including bananas, dog food,
ice cream and Cheerios—below cost. Meijer, which runs 200 stores in five
states, says this was the first time it had ever been accused of
hurting consumers by charging too little. Nonetheless, Wisconsin’s
Department of Agriculture, Trade and Consumer Protection sent the
superstore a letter explaining the requirements of the state’s Unfair
Sales Act.
The story is similar for Krist Oil, a family-owned gasoline company
with more than 70 locations, mostly in Michigan’s Upper Peninsula and
Northern Wisconsin. Krist has the freedom to determine the most
competitive price for its gasoline at its stations in Michigan, but it
is legally barred from doing so in Wisconsin. Although it wants to lower
prices, Krist is forced by the state to charge a markup of no less than
9.18%. The biggest losers are workers in rural Northern Wisconsin, who
could benefit from lower gas prices.
In the 1930s, many states tried to ward off economic collapse by
barring businesses from selling goods below cost. The idea was that
minimum markups would soften price competition and keep companies
afloat. But almost 90 years after the stock crash of Black Tuesday,
these laws are just propping up Overpriced Wednesdays.
Some consumer advocates argue that minimum markups are still
necessary to prevent big chains from using their economies of scale to
drive small retailers out of business. This claim was debunked last year
in
a study by
Will Flanders, research director at the Wisconsin Institute for Law and
Liberty, and Ike Brannon, a fellow at the Cato Institute. After
examining data from all 50 states, they concluded that there is no
causal relationship between minimum-markup laws and the number of small
businesses. So-called mom-and-pop retailers are doing just fine in
states that do not have these laws on the books.
[…]
With wages flat in many parts of the country, Americans could use the
savings to be had from allowing businesses to compete more effectively.
If lawmakers in the 26 states with minimum markups are looking for an
issue to run on in 2018, one that can appeal to free-market
conservatives, urban Democrats, Trump populists and soccer moms, this
would be a great place to start.
http://www.will-law.org/will-press-release-icymi-will-americans-tax-reform-wall-street-journal-calling-repeal-wisconsins-outdated-unfair-sales-act/
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