Lowest Legal Prices?!

If you grew up in Wisconsin this picture declaring proudly that beer can be purchased at the ‘lowest legal price’ is common place. However, as a transplant to the great state of Wisconsin, this sign always draws my attention and my disdain. In Wisconsin there is a law dating back to 1939 called the Unfair Sales Act or commonly referred to as the Minimum Markup Law and it includes much more than beer sales. The law applies to all products, but not services.

In a nutshell, this law prohibits merchandisers from selling anything below the total cost incurred by the retailer or wholesaler for buying, transporting, taxes and any other cost incurred to bring the product to market. In other words, a business is not allowed to sell below cost to attract customers or most and other reason like dumping slow moving inventory.

The state claims that doing so “is a form of deceptive advertising and an unfair method of competition in commerce.” Really?!

There have been a few unsuccessful attempts to eliminate the act. Most recently in late 2019. However, the attempt was to mask a plan to raise the state gasoline tax by an additional $.08 per gallon. I’m guessing they were hoping that consumers would not notice the increased tax if the price before taxes went down. Talk about deceptive and unfair methods…

I’m not a fan of big brother, so I don’t want to see a maximum markup law either. Letting the free market of supply and demand set pricing is good by me, but I digress.

This law is overdue to go away. Let’s hope it happens sooner, not later.

Here is the actual law as posted on the state of Wisconsin web site:

• For all merchandise except alcoholic beverages, tobacco products, and motor vehicle fuel, cost to either wholesalers or retailers is defined as invoice cost or replacement cost, whichever is lower, less all trade discounts, plus any excise taxes and any cost incurred for transportation and any other charges not otherwise included in the invoice cost or replacement cost of the merchandise.
• For alcohol and tobacco products the definition of cost also includes a 3% cost of doing business markup for wholesalers and a 6% cost of doing business markup for retailers. Cost for wholesalers who operate retail outlets or retailers who purchase directly from the manufacturer includes a 9.18% markup (3% plus 6% compounded).
• For motor vehicle fuel, the definition of “cost” relies on either the “average posted terminal price” or invoice cost (whichever is greater) plus a cost of doing business markup. Use our Motor Vehicle Fuel Cost Calculator.
• Penalties for violating the Unfair Sales Act may include a civil forfeiture of $50 to $500 for the first violation and $200 to $2500 for each subsequent violation. Sellers of motor vehicle fuel and/or tobacco products may file a private cause of action to seek damages if they are injured by a competitor’s price.
• Exceptions to the law are made to allow for matching a competitor’s price, clearance and final liquidation sales, sales of damaged merchandise and perishables, contracted governmental institution sales and for merchandise sold to charitable or relief agencies.