AB126: Bill Text

LRB-1586/1

MGG:cmh&jlg:km

1999 - 2000 LEGISLATURE

1999 Assembly BILL 126

February 16, 1999 - Introduced by Representatives Jensen, Krug, Plale, Colon, Goetsch, Carpenter, Wasserman and Gundrum, cosponsored by Senator Darling. Referred to Committee on Assembly Organization.

AB126,1,10 An Act to repeal 20.115 (1) (r), 100.201 (2) (h) 5., 100.26 (9), 100.30 (2) (a), 100.30 (2) (am) 1m., 100.30 (2) (am) 2., 100.30 (2) (c) 1g., 100.30 (2) (c) 1r., 100.30 (2) (c) 2., 100.30 (2) (cg), 100.30 (2) (cL), 100.30 (2) (cm), 100.30 (2) (j), 100.30 (2) (m), 100.30 (2m) (c), 100.30 (5m), 100.30 (6) (a) 9. and 100.30 (7); to renumber and amend 100.30 (2) (am) 1., 100.30 (2) (c) 1. a. and 100.30 (2) (c) 1. b.; to amend 20.115 (8) (k), 93.60, 100.30 (1), 100.30 (2) (b), 100.30 (2) (cj), 100.30 (2) (d), 100.30 (2) (f), 100.30 (2) (g), 100.30 (2) (L) (intro.), 100.30 (2m) (a), 100.30 (2m) (b), 100.30 (3), 100.30 (5) (a), 100.30 (6) (a) 7. and 814.04 (intro.); and to create 100.30 (2) (ac) and 100.30 (2) (ck) of the statutes; relating to: the regulation of the sale of merchandise below cost.

Analysis by the Legislative Reference Bureau

Currently, the state unfair sales act or "minimum markup" law requires a wholesaler of motor vehicle fuel, tobacco products or fermented malt beverages, liquor or wine (alcohol beverages) to sell those items for at least 3% more than the cost of the items to the wholesaler. The law requires a retailer of tobacco products or alcohol beverages to sell those items for a price that is at least 6% more than the cost of the items to the retailer. For motor vehicle fuel sold at retail, the percentage varies depending on whether the fuel is sold from a retail station. The law requires a wholesaler or retailer to sell any other type of merchandise for a price that is at least the wholesaler's or retailer's cost.

Current law provides specific methods for determining the cost to the wholesaler or the retailer. For merchandise other than motor vehicle fuel, basically the cost is computed as the lesser of the invoice cost or replacement cost of the merchandise, plus taxes and certain overhead costs and minus certain trade discounts (computed cost). For motor vehicle fuel, the cost is the greater of the computed cost or the average posted terminal price, which is an average price at which motor vehicle fuel is offered on a specific date plus excise taxes and certain overhead costs.

The minimum markup requirements under the act do not apply to merchandise that is sold in clearance sales, damaged merchandise and merchandise at risk of spoiling. The requirements also do not apply if merchandise is priced in good faith to meet the existing price of a competitor.

The act also prohibits offering loss leaders. A loss leader is the sale of an item of merchandise at less than cost in order to induce the purchase of other merchandise or to divert trade unfairly from a competitor.

This bill narrows the scope of the act. Under the bill only tobacco products and alcohol beverages are subject to the minimum markup requirements and the prohibition against loss leaders.

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:

AB126, s. 1 Section 1. 20.115 (1) (r) of the statutes is repealed.

AB126, s. 2 Section 2. 20.115 (8) (k) of the statutes is amended to read:

AB126,2,8 20.115 (8) (k) Computer system equipment, staff and services. The amounts in the schedule for the costs of computer system equipment, staff and services. All moneys transferred for this purpose from pars. (ga), (gm), (h), (ha), (i), (kp), (ks), (m) and (pz) and subs. (1) (g), (gb), (gh), (gm), (hm), (j), (jm), (m) , (r) and (s), (2) (g), (ha), (j), (k) and (m), (3) (g), (h), (i), (j), (ja), (L) and (m) and (7) (g), (ga), (gm), (k) and (m) shall be credited to this appropriation account.

AB126, s. 3 Section 3. 93.60 of the statutes is amended to read:

AB126,3,11 93.60 Computer system equipment, staff and services transfers. The department may transfer to the appropriation account under s. 20.115 (8) (k) in each fiscal year an amount from the appropriation accounts under s. 20.115 (1) (g), (gb), (gh), (gm), (hm), (j), (jm), (m), (r) and (s), (2) (g), (ha), (j), (k) and (m), (3) (g), (h), (i), (j), (ja), (L) and (m), (7) (g), (ga), (gm), (k) and (m) and (8) (ga), (gm), (h), (ha), (i), (kp), (ks), (m) and (pz). The total amount that the department transfers in each fiscal year from these appropriation accounts to the appropriation account under s. 20.115 (8) (k) may not exceed the amount specified in the schedule under s. 20.115 (8) (k) for each fiscal year. The amounts transferred from each appropriation account shall be based on the actual costs incurred by the department for computer system equipment, staff and services provided for the purpose of that appropriation account.

AB126, s. 4 Section 4. 100.201 (2) (h) 5. of the statutes is repealed.

AB126, s. 5 Section 5. 100.26 (9) of the statutes is repealed.

AB126, s. 6 Section 6. 100.30 (1) of the statutes is amended to read:

AB126,3,24 100.30 (1) Policy. The practice of selling certain items of merchandise cigarettes, other tobacco products and alcohol beverages below cost in order to attract patronage is generally a form of deceptive advertising and an unfair method of competition in commerce. Such practice causes commercial dislocations, misleads the consumer, works back against the farmer, directly burdens and obstructs commerce, and diverts business from dealers who maintain a fair price policy. Bankruptcies among merchants who fail because of the competition of those who use such methods result in unemployment, disruption of leases, and nonpayment of taxes and loans, and contribute to an inevitable train of undesirable consequences, including economic depression.

AB126, s. 7 Section 7. 100.30 (2) (a) of the statutes is repealed.

AB126, s. 8 Section 8. 100.30 (2) (ac) of the statutes is created to read:

AB126,4,3 100.30 (2) (ac) "Alcohol beverage" means a fermented malt beverage, intoxicating liquor or intoxicating wine.

AB126, s. 9 Section 9. 100.30 (2) (am) 1. of the statutes is renumbered 100.30 (2) (am) and amended to read:

AB126,4,16 100.30 (2) (am) With respect to the sale of cigarettes or other tobacco products, fermented malt beverages or intoxicating liquor or wine, "cost "Cost to retailer" means the invoice cost of the merchandise to the retailer within 30 days prior to the date of sale, or replacement cost of the merchandise to the retailer, whichever is lower, less all trade discounts except customary discounts for cash, plus any excise taxes imposed on such merchandise or the sale thereof other than excise taxes collected by the retailer, and any cost incurred for transportation and any other charges not otherwise included in the invoice cost or the replacement cost of the merchandise as herein set forth, to which shall be added a markup to cover a proportionate part of the cost of doing business, which markup, in the absence of proof of a lesser cost, shall be 6% of the cost to the retailer as herein set forth.

AB126, s. 10 Section 10. 100.30 (2) (am) 1m. of the statutes is repealed.

AB126, s. 11 Section 11. 100.30 (2) (am) 2. of the statutes is repealed.

AB126, s. 12 Section 12. 100.30 (2) (b) of the statutes is amended to read:

AB126,5,6 100.30 (2) (b) "Cost to retailer" and "cost to wholesaler" as defined in pars. (am) and (c) mean bona fide costs; and purchases made by retailers, and wholesalers, wholesalers of motor vehicle fuel and refiners at prices which cannot be justified by prevailing market conditions within this state shall not be used in determining cost to the retailer and cost to the wholesaler. Prices at which purchases of merchandise other than motor vehicle fuel are made by retailers or wholesalers cannot be justified by prevailing market conditions in this state when they are below the lowest prices at which the manufacturer or producer of such merchandise sells to other retailers or wholesalers in this state. Prices at which sales of motor vehicle fuel are made by retailers, wholesalers, wholesalers of motor vehicle fuel and refiners cannot be justified by prevailing market conditions in this state when they are below the applicable cost to retailers and cost to wholesalers specified under pars. (am) and (c).

AB126, s. 13 Section 13. 100.30 (2) (c) 1. a. of the statutes is renumbered 100.30 (2) (c) 1. and amended to read:

AB126,5,20 100.30 (2) (c) 1. With respect to the sale of cigarettes or other tobacco products, fermented malt beverages or intoxicating liquor or wine, "cost "Cost to wholesaler" means, except as provided in subd. 1. b. 2m., the invoice cost of the merchandise to the wholesaler within 30 days prior to the date of sale, or the replacement cost of the merchandise to the wholesaler, whichever is lower, less all trade discounts except customary discounts for cash, plus any excise taxes imposed on the sale thereof prior to the sale at retail, and any cost incurred for transportation and any other charges not otherwise included in the invoice cost or the replacement cost of the merchandise as herein set forth, to which shall be added, except for sales at wholesale between wholesalers, a markup to cover a proportionate part of the cost of doing business, which markup, in the absence of proof of a lesser cost, shall be 3% of the cost to the wholesaler as herein set forth.

AB126, s. 14 Section 14. 100.30 (2) (c) 1. b. of the statutes is renumbered 100.30 (2) (c) 2m. and amended to read:

AB126,6,6 100.30 (2) (c) 2m. For every person holding a permit as a distributor as defined in s. 139.30 (3) or as a multiple retailer as defined in s. 139.30 (8), with respect to that portion of the person's business which involves the purchase and sale of cigarettes "cost to wholesaler" means the cost charged by the cigarette manufacturer, disregarding any manufacturer's discount or any discount under s. 139.32 (5), plus the amount of tax imposed under s. 139.31. Except for a sale at wholesale between wholesalers, a markup to cover a proportionate part of the cost of doing business shall be added to the cost to wholesaler. In the absence of proof of a lesser cost, this markup shall be 3% of the cost to wholesaler as set forth in this subd. 1. b. subdivision.

AB126, s. 15 Section 15. 100.30 (2) (c) 1g. of the statutes is repealed.

AB126, s. 16 Section 16. 100.30 (2) (c) 1r. of the statutes is repealed.

AB126, s. 17 Section 17. 100.30 (2) (c) 2. of the statutes is repealed.

AB126, s. 18 Section 18. 100.30 (2) (cg) of the statutes is repealed.

AB126, s. 19 Section 19. 100.30 (2) (cj) of the statutes is amended to read:

AB126,6,16 100.30 (2) (cj) "Existing price of a competitor" means a price being simultaneously offered to a buyer for merchandise of like quality and quantity by a person who is a direct competitor of the retailer, or wholesaler, wholesaler of motor vehicle fuel or refiner and from whom the buyer can practicably purchase the merchandise.

AB126, s. 20 Section 20. 100.30 (2) (ck) of the statutes is created to read:

AB126,6,19 100.30 (2) (ck) "Merchandise" means, cigarettes, other tobacco products and alcohol beverages.

AB126, s. 21 Section 21. 100.30 (2) (cL) of the statutes is repealed.

AB126, s. 22 Section 22. 100.30 (2) (cm) of the statutes is repealed.

AB126, s. 23 Section 23. 100.30 (2) (d) of the statutes is amended to read:

AB126,7,2 100.30 (2) (d) "Replacement cost" means the cost computed as specified in par. (am) or (c) at which the merchandise sold could have been bought by the retailer, or wholesaler or wholesaler of motor vehicle fuel at any time if bought in the same quantity as the retailer's, or wholesaler's or wholesaler of motor vehicle fuel's last purchase of the said merchandise.

AB126, s. 24 Section 24. 100.30 (2) (f) of the statutes is amended to read: