An interpreter for the hearing-impaired will be available upon request for these hearings. Please make reservations for a hearing interpreter by contacting Judy Jung (608) 224-4972 or by contacting the TDD at the Department at (608) 224-5058.
Hearing Information
The hearings are scheduled as follows:
February 27, 1996 Basement Auditorium
Tuesday LaCrosse Co. Courthouse
Commencing 400 N. Fourth Street
at 10:00 a.m. LaCROSSE, WI
Handicapped Accessible
February 28, 1996 Room 105
Wednesday Dist. State Office Bldg.
Commencing 718 West Clairemont
at 10:00 a.m. EAU CLAIRE, WI
Handicapped Accessible
February 29, 1996 Room 219
Thursday University Center
Commencing UW-Whitewater
at 10:00 a.m. 800 West Main St.
Handicapped Accessible WHITEWATER, WI
March 5, 1996 Room 152A
Tuesday Dist. State Office Bldg.
Commencing 200 N. Jefferson St.
at 10:00 a.m. GREEN BAY, WI
Handicapped Accessible
March 6, 1996 Room 149
Wednesday University Extension Office
Commencing Marathon Co. Courthouse
at 10:00 a.m. 500 Forest St.
Handicapped Accessible WAUSAU, WI
March 15, 1996 Room 106
Friday State Agriculture Bldg.
Commencing 2811 Agriculture Dr.
at 10:00 a.m. MADISON, WI
Handicapped Accessible
Analysis
Statutory authority: ss. 93.07 (1), 93.15, 97.20 (4) and 100.20 (2)
Statutes interpreted: ss. 93.15, 97.20, 100.106, 100.20 and 100.22
This rule does all of the following:
○ Prohibits a dairy plant operator from discriminating between milk producers in the price paid for milk, unless the discrimination is based on a difference in milk quality or procurement costs, or is justified in order to meet a competitor's price.
○ Establishes standards which a dairy plant operator must meet in order to establish a defense based on milk quality, procurement cost justification or meeting competition.
○ Spells out enforcement standards and procedures. The Department may require a dairy plant operator to file documentation justifying discriminatory prices, and may take enforcement action against an operator who fails to provide adequate justification.
○ Makes technical changes in current rules related to milk producer payroll statements. The changes are intended to accommodate the new multiple component pricing method now used under federal milk marketing orders.
The Department may ask the Attorney General or a district attorney to prosecute price discrimination violations in court, and may take action against a violator's dairy plant license. Under s. 100.20 (5), Stats., a producer or competitor injured by a violation may also sue the violator directly, and may recover double damages, costs and reasonable attorney fees.
BACKGROUND
Each year, Wisconsin's 27,000 dairy farmers sell nearly $3 billion worth of milk to dairy plant operators. Milk sales represent the primary or exclusive source of income for thousands of Wisconsin farm families.
Currently, many dairy plant operators appear to be discriminating between milk producers in the amount paid for milk. Many operators appear to be paying higher prices to large producers which cannot be fully justified on the basis of milk quality or differences in procurement cost. Discrimination in milk prices may injure small milk producers and competing dairy plant operators, and may contribute to unwarranted concentration in the dairy industry.
Section 100.22, Stats.
Section 100.22, Stats., currently prohibits a dairy plant operator from discriminating between milk producers in the amount paid for milk if the discrimination injures producers or competition; however, the law affords the following defenses:
○ An operator may justify discriminatory prices based on measurable differences in milk quality. Milk quality premiums, if any, must be based on a pre-announced premium schedule which the operator makes available on equal terms to all producers. The operator must also comply with minimum testing requirements under s. ATCP 80.26,Wis. Adm. Code.
○ An operator may pay discriminatory prices if the operator can justify the price differences based on differences in procurement costs.
○ An operator may pay discriminatory prices in order to “meet competition.”
The Department may investigate violations of s. 100.22, Stats., and may request the Attorney General or a county district attorney to prosecute violations in court; however, investigation and prosecution are currently hampered by a lack of clear standards in the law. For example, there are no standards for what constitutes “cost-justification” or “meeting competition.” Currently, there are no rules interpreting s. 100.22, Stats.
Section 100.20, Stats.
Section 100.20, Stats. (Wisconsin's “Little FTC Act”), broadly prohibits unfair trade practices and methods of competition in business. Under s. 100.20 (2), Stats., the Department may adopt rules prohibiting unfair trade practices and methods of competition, and requiring fair practices. The Department has previously adopted rules under s. 100.20 (2), Stats., prohibiting price discrimination related to fermented malt beverages, soda water beverages and motor fuel. The Department is adopting this permanent rule under authority of s. 100.20 (2), Stats., and other applicable laws.
Enforcement Options
Under s. 100.20 (5), Stats., a person who suffers a monetary loss because of a violation of a rule adopted under s. 100.20 (2), Stats., may sue the violator in court, and may recover twice the amount of the loss together with costs and reasonable attorney fees. That private remedy is applicable to violations of this rule.
The Department may also ask the Attorney General or county district attorneys to pursue violations in court, or may pursue administrative proceedings to suspend or revoke a dairy plant operator's license.
RULE CONTENTS
Price Discrimination Prohibited
This rule prohibits a dairy plant operator from doing either of the following if the operator's action injures competition or injures any producer:
○ Discriminating between producers in the milk price paid to those producers. “Milk price” means a producer's average gross pay per hundredweight, less hauling charges.
○ Discriminating between producers in the value of services which the operator furnishes to those producers but does not include in the payroll price.
Defenses
A dairy plant operator may defend against a milk price discrimination charge by proving any of the following, based on documentation which the operator possessed at the time of the alleged discrimination:
○ That the discrimination between producers was based on an actual difference in milk quality. Among other things, the operator must show that the milk quality premiums were based on a pre-announced premium schedule that was available on equal terms to all producers, and that the operator tested the milk according to current rules.
○ That the discrimination between producers was fully justified by differences in procurement costs between producers. The rule spells out the relevant costs which the operator may consider, and the method by which the operator must calculate the comparative costs for each producer.
○ That the discrimination between producers was justified in order to meet competition. A dairy plant operator may not claim this defense unless the operator proves all of the following:
□ The operator offered the discriminatory milk price or service in response to a competitor's prior and continuing offer to producers in the operator's procurement area.
□ The operator's discriminatory milk price or service did not exceed the competitor's offer.
□ The operator offered the discriminatory milk price or service only in that part of the operator's procurement area which overlapped the competitor's procurement area.
Demanding Justification for Discriminatory Prices
Under this rule, the Department may require a dairy plant operator to file documentation justifying an apparent discrimination in prices between producers. A dairy plant operator must file the documentation within 14 days after the operator receives the Department's demand, or by a later date which the Department specifies in its demand. The Department may extend the filing deadline for good cause shown.
Failure to Justify Discrimination
Under this rule, if the Department finds that a dairy plant operator has not adequately justified the operator's discriminatory milk prices, the Department may give the dairy plant operator written notice of that finding. A notice is not a prerequisite to an enforcement action against the violator; however, the notice is open to public inspection under subch. II of ch. 19, Stats.
Injury to Producer
This rule provides that in an administrative or court enforcement action, or in a private lawsuit under s. 100.20 (5), Stats., evidence that a complaining producer was paid less than another producer shipping milk to the same dairy plant during the same pay period is presumptive evidence that the complaining producer has been injured.
Calculating Milk Procurement Costs
If a dairy plant operator wishes to justify price discrimination between two producers based on a difference in procurement costs between those producers, the operator must calculate procurement costs per hundredweight as follows:
STEP 1: Calculate the operator's average total cost, per producer per pay period, for all of the following:
○ Dairy farm field service costs.
○ Costs to test dairy farm milk shipments.
○ Producer payroll expenses.
○ Dairy farm license fees and other routine expenses incurred in connection with the licensing and regulation of dairy farms.
