Thursday, August 20, 2015
Meijer's Runs Afoul of Wisconsin's Unfair Sales Act for Selling To Low
Milwaukee Lawyer Complains About Meijer’s Low Prices Meijer, AKA Meijer Thrifty Acres, is a hypermart chain in the Midwest. It is a pioneer in supersized retailers that seemingly sell everything. It precedes Wal-Mart’s Superstores. Meijer has survived and expanded to over 200 superstores in the Midwest despite vigorous competition from Wal-Mart, Target, Costco, and Sam’s Club. The Grand Rapids, Michigan chain in entrenched in Michigan, Indiana, Ohio, Illinois, and Kentucky. It is expanding into Wisconsin, and as is its practice, it does what several companies do in entering a new market: offer attention-grabbing specials to attract customers. These offers may be below cost. That grabbed the attention of Milwaukee attorney Gerardo Gonzalez, or whoever is funding him. He dusted off Wisconsin’s anti-chain store statute/relic from eight decades ago. A national fear erupted in the late 1920’s and early 1930’s over the rise of chain stores, whose purported predatory pricing and other practices were driving small merchants out of business. Sound familiar? The then large offending chains were A&P Supermarkets and Woolworth’s. Anyone todays remember the Great Atlantic & Pacific Tea Co. and F. W. Woolworth & Co.? How about S.K. Kresge & Co.? or Kress & Co.? What about Sears, Roebuck & Co. where “America used to shop?” The fears were palpable. The result was the enactment by states and the federal government of anti-chain store legislation. They purported to protect consumers, but were geared to propping up prices by protecting existing competitors. They do not exclude low-price competitors, such as Wal-Mart. Congress enacted in 1936 the Robinson-Patman Act, which prohibited price discrimination; e.g. large retailers getting discounts unavailable to smaller competitors. It has rarely been used successfully in recent decades. Sixteen states, including Wisconsin, enacted minimum pricing markup laws. The 1939 Wisconsin Unfair Sales Act prohibits marketing and selling goods below the marketer’s costs Consumers are hurt by these statures. For example, Wal-Mart cannot offer its flat rate policy of $4 for generic drugs. Meijer was opening stores in Kenosha and Grafton, Wisconsin. The grand opening ads contained the chain’s slogan “higher standards lower prices,” coupled with selective low prices. Attorney Gonzalez filed four complaints with 37 products with the Illinois department of Agriculture, Trade and Consumer protection, charged with enforcing the unenforcible law. Among the charges were selling bananas at $.28/pound and milk at $1.99/gallon. These come-ons are common in weekly ads by retailers. Black Fridays features scores of products that would technically violate the statute. Among the utter inanities of the statute is that it does not ban free givaways, e.g., buy $15 of cereals, and receive a gallon on milk free. One effect in Wisconsin is that attention is being paid to repealing the Wisconsin Unfair Sales Act.