LRB-3454/1
CTS:lmk:nwn
2007 - 2008 LEGISLATURE
February 19, 2008 - Introduced by Representatives Kramer, Vukmir, Fields, J. Ott,
Pridemore, Jeskewitz, Nass, Newcomer, Bies, Kleefisch and Wasserman,
cosponsored by Senators Carpenter, Lehman and Darling. Referred to
Committee on Judiciary and Ethics.
AB820,1,8
1An Act to repeal 20.115 (1) (r), 100.26 (9), 100.30 and 100.33 (1) (g);
to amend
2100.201 (2) (h) 5., 100.264 (2) (intro.), 100.33 (1) (c), 100.33 (1) (h), 133.03 (1),
3133.03 (2), 133.03 (3), 133.04 (2), 133.04 (3), 133.05 (3), 133.05 (4), 134.04 (1),
4139.39 (3), 165.065, 814.04 (intro.) and 951.10 (2); and
to create 100.301,
5100.33 (1) (eg), 100.33 (1) (er) and 100.33 (1) (i) of the statutes;
relating to: the
6minimum price of merchandise sold at wholesale or retail, prohibiting
7anticompetitive pricing and pricing that injures competition, and granting
8rule-making authority.
Analysis by the Legislative Reference Bureau
Under current law, the Unfair Sales Act or "minimum markup" law prohibits
"loss leaders," or wholesale and retail sales of merchandise at a price below the cost
of the merchandise to the seller. With respect to motor vehicle fuel, tobacco products,
and alcoholic beverages, the current formulas for calculating cost add minimum
markups from 3 to 9.18 percent to cover a portion of the seller's cost of doing business.
This bill repeals the Unfair Sales Act and creates prohibitions against certain
pricing practices by wholesale and retail sellers of goods. First, the bill prohibits
anticompetitive pricing, which occurs when a seller sets a price lower than an
appropriate measure of the seller's cost and has a dangerous probability of recouping
the seller's investment in below-cost pricing. Anticompetitive pricing, as defined in
the bill, also violates a current provision that prohibits contracts, combinations, or
conspiracies in restraint of trade or commerce. See Conley Publishing Group v.
Journal Communications, Inc., 2002 WI 121 (2002), overruled in part on other
grounds, Olstad v. Microsoft Corp., 2005 WI 121 (2005). Second, the bill prohibits
pricing that injures competition, which occurs when a seller sets a price lower than
an appropriate measure of the seller's cost and the price is likely to cause a direct,
substantial, and reasonably foreseeable injury to consumers. A seller's pricing does
not violate either prohibition unless all of the following apply: 1) the pricing causes,
or is likely to cause, substantial injury to consumers; 2) the injury is not reasonably
avoidable by consumers; and 3) the injury is not outweighed by countervailing
benefits to consumers or competition.
Under the bill, the prohibitions are enforced concurrently and independently
by the Department of Agriculture, Trade and Consumer Protection (DATCP), the
Department of Justice (DOJ), and district attorneys as follows. If DATCP has reason
to believe a seller has engaged in pricing that injures competition, DATCP may, after
a hearing, issue an order requiring the seller to cease the violation. The order may
require the violator to pay a forfeiture not more than $500 for a first violation or
$2,500 for subsequent violations. An order issued by the department is reviewable
by a court under procedures available under current law.
If DOJ has reason to believe a seller has engaged in pricing that injures
competition, DOJ may bring an action seeking a court order requiring the seller to
cease the violation. The court may require the violator to pay a forfeiture not more
than $500 for a first violation or $2,500 for subsequent violations. If DOJ or a district
attorney has reason to believe a seller has engaged in anticompetitive pricing, DOJ
or the district attorney may commence an action against the seller under the current
provision prohibiting contracts, combinations, or conspiracies in restraint of trade
or commerce. In lieu of initiating an enforcement action, DOJ, DATCP, or a district
attorney may accept an agreement by a seller to stop a pricing practice. Such an
agreement may provide for payment by the seller of a reasonable forfeiture. If a
seller violates the agreement, the seller may be required to pay a forfeiture up to
$25,000.
DATCP is authorized to promulgate rules administering or interpreting the
prohibitions created by the bill. In doing so, DATCP must ensure that the rules are
consistent with federal laws and regulations concerning anticompetitive pricing,
request commentary on proposed rules from the federal trade commission, and
consult and cooperate actively with DOJ.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB820, s. 1
1Section
1. 20.115 (1) (r) of the statutes is repealed.
AB820, s. 2
1Section
2. 100.201 (2) (h) 5. of the statutes is amended to read:
AB820,3,62
100.201
(2) (h) 5. This paragraph shall also apply to any retailer who owns,
3operates
, or otherwise contracts for, directly or indirectly, facilities for
4manufacturing or processing any selected dairy product
, and to the cost of a selected
5dairy product, as defined in this paragraph, shall be added both the wholesale and
6retail markup as provided in s. 100.30.
AB820, s. 3
7Section
3. 100.26 (9) of the statutes is repealed.
AB820, s. 4
8Section
4. 100.264 (2) (intro.) of the statutes is amended to read:
AB820,3,169
100.264
(2) Supplemental forfeiture. (intro.) If a fine or a forfeiture is
10imposed on a person for a violation under s. 100.16, 100.17, 100.18, 100.182, 100.183,
11100.20, 100.205, 100.207, 100.21,
100.30 (3), 100.35, 100.44 or 100.46 or a rule
12promulgated under one of those sections, the person shall be subject to a
13supplemental forfeiture not to exceed $10,000 for that violation if the conduct by the
14defendant, for which the violation was imposed, was perpetrated against an elderly
15person or disabled person and if the court finds that any of the following factors is
16present:
AB820, s. 5
17Section
5. 100.30 of the statutes is repealed.
AB820, s. 6
18Section
6. 100.301 of the statutes is created to read:
AB820,3,21
19100.301 Anticompetitive pricing, pricing that injures competition
20prohibited. (1) Definition. In this section, "seller" means retail sellers and
21wholesale sellers of tangible personal property.
AB820,3,22
22(2) Prohibited pricing. Subject to sub. (3), no seller may do any of the following:
AB820,3,2323
(a) Engage in anticompetitive pricing.
AB820,3,2524
1. For purposes of this paragraph, a seller's pricing is anticompetitive if all of
25the following apply:
AB820,4,1
1a. The seller's price is less than an appropriate measure of the seller's cost.
AB820,4,32
b. The seller has a dangerous probability of recouping the seller's investment
3in below-cost pricing.
AB820,4,104
2. For purposes of this paragraph, a seller recoups the seller's investment if it
5can be shown that the seller raises and sustains prices above a competitive level and
6is likely to do so in a manner that is sufficient to compensate the seller for the losses
7the seller incurred by lowering the seller's price below an appropriate measure of the
8seller's cost. Evidence that a seller's price is less than an appropriate measure of the
9seller's cost is not sufficient to prove that the seller has a dangerous probability of
10recouping the seller's investment in below-cost pricing.
AB820,4,1211
(b) Engage in pricing that injures competition. For purposes of this paragraph,
12a seller's pricing injures competition if all of the following apply:
AB820,4,1313
1. The seller's price is less than an appropriate measure of the seller's cost.
AB820,4,1514
2. The seller's price is likely to cause a direct, substantial, and reasonably
15foreseeable injury to consumers.
AB820,4,17
16(3) Limitation. A seller's pricing does not violate this section unless all of the
17following apply:
AB820,4,1918
(a) The seller's pricing causes or is likely to cause substantial injury to
19consumers.
AB820,4,2020
(b) The injury to consumers is not reasonably avoidable by consumers.
AB820,4,2221
(c) The injury to consumers is not outweighed by countervailing benefits to
22consumers or to competition.
AB820,4,24
23(4) Rule-making. (a) If the department proposes a rule administering or
24interpreting this section, the department shall do all of the following:
AB820,5,2
11. Ensure that the rule is consistent with federal laws and regulations and with
2controlling legal precedent interpreting such laws and regulations.
AB820,5,63
2. Request commentary regarding the proposed rule from the federal trade
4commission. If the federal trade commission provides commentary, the department
5shall submit the commentary to the legislative reference bureau for publication in
6the administrative register.
AB820,5,77
3. Consult, and cooperate actively with, the department of justice.
AB820,5,98
(b) The department shall annually review any rules promulgated under this
9section to ensure that the rules remain consistent with federal laws and regulations.
AB820,5,19
10(5) Enforcement; department. (a) If the department has reason to believe that
11a seller has violated sub. (2) (b) and that action by the department is in the public
12interest, the department may serve the seller with a complaint stating the facts
13alleged by the department and giving the seller notice of a hearing that will be held
14at least 30 days after the department serves the complaint to the seller. The seller
15may appear at the hearing noticed in the complaint to show cause why the
16department should not issue an order requiring the seller to cease the violation
17alleged in the department's complaint. Any person may apply to intervene in a
18proceeding under this subsection for good cause shown. The testimony in a hearing
19under this subsection shall be transcribed and filed with the department.
AB820,6,320
(b) If, after a hearing, the department determines that the seller has violated
21sub. (2) (b), the department shall prepare written findings of fact, shall issue an order
22requiring the seller to cease the violation, and may require the seller to pay a
23forfeiture. A forfeiture under this paragraph may not exceed $500 for a first violation
24or $2,500 for each subsequent violation. An order under this paragraph shall be
25subject to judicial review under ch. 227. A violation of an order issued under this
1paragraph may be punished as contempt under ch. 785 in the manner provided for
2disobedience of a court order, if the department files an affidavit attesting to the
3violation in a court in the county where the violation occurred.
AB820,6,74
(c) The department may, after notice and opportunity for hearing, reopen and
5modify or set aside findings of fact or an order under this subsection, if the
6department determines that such action is appropriate because of changes in the law
7or facts underlying the findings of fact or order, or is in the public interest.
AB820,6,18
8(6) Enforcement; department of justice. If the department of justice has
9reason to believe that a seller has violated sub. (2) (b) and that action by the
10department of justice is in the public interest, the department of justice may
11commence an action in circuit court in the name of the state to restrain the violation
12by temporary or permanent injunction. The department of justice may subpoena
13persons and require the production of books and other documents, and may request
14the department to exercise its authority under this section to aid in the investigation
15of alleged violations of this section. In an action under this subsection, if a court
16determines that a seller has violated sub. (2) (b), the court may impose on the seller
17a forfeiture not to exceed $500 for a first violation or $2,500 for each subsequent
18violation.
AB820,6,22
19(7) Enforcement; antitrust action. If the department of justice or a district
20attorney has reason to believe a seller has violated sub. (2) (a) of this section, the
21department of justice, or, after consulting with the department of justice, a district
22attorney, may commence an action against the seller under s. 133.03.
AB820,7,5
23(8) Enforcement; agreement to stop pricing practice. Notwithstanding subs.
24(5) to (7), in lieu of instituting or continuing an action under subs. (5) to (7), the
25department, the department of justice, or a district attorney may accept a seller's
1written agreement to stop pricing alleged to violate this section. An agreement under
2this subsection may provide for the payment by the seller of a reasonable forfeiture.
3If a seller violates an agreement under this subsection, the seller may be required
4to pay a reasonable forfeiture not to exceed $25,000. A seller's agreement under this
5subsection is not evidence that the seller violated this section.
AB820,7,7
6(9) Other provisions. (a) This section shall be construed and applied
7consistent with federal laws and regulations concerning anticompetitive pricing.
