SB414: Bill Text

LRB-4597/1

RAC&MGG:skg:mkd

1995 - 1996 LEGISLATURE

1995 Senate BILL 414

November 9, 1995 - Introduced by Senators Welch, Buettner and Schultz, cosponsored by Representatives Brancel, Lehman, Hahn, Lorge, Ladwig, Seratti, Olsen, Huber, Vrakas, F. Lasee and Grothman. Referred to Committee on Business, Economic Development and Urban Affairs.

SB414,1,8 An Act to renumber and amend 100.30 (2) (a); to amend 100.30 (2) (b), 100.30 (2) (c) 1. a., 100.30 (2) (d), 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.); to repeal and recreate 100.33 (1) (h) and 814.04 (intro.); and to create 100.30 (2) (a), 100.30 (2) (am) 1m., 100.30 (2) (cb), 100.30 (2) (cg), 100.30 (2) (cm), 100.30 (2) (j), 100.30 (2) (m), 100.30 (4m), 100.30 (5m), 100.30 (6) (a) 9. and 100.30 (6) (a) 10. of the statutes; relating to: the regulation of the sale of merchandise below cost and providing a penalty.

Analysis by the Legislative Reference Bureau

Currently, with certain exceptions, the state unfair sales or "minimum markup" law requires a wholesaler of cigarettes, other tobacco products, fermented malt beverages, intoxicating liquor, wine or motor vehicle fuel to sell that merchandise for at least 3% more than the cost of the merchandise to the wholesaler. The law requires a retailer of cigarettes, other tobacco products, fermented malt beverages, intoxicating liquor, wine or motor vehicle fuel to sell that merchandise for at least 6% more than the cost of the merchandise to the retailer. Finally, the law requires a retailer or wholesaler of other merchandise to sell that merchandise for at least its cost to the retailer or wholesaler. Generally, under the unfair sales law, cost is computed as the lesser of the invoice cost or the replacement cost of the merchandise, plus excise taxes and overhead costs, and minus certain trade discounts.

The unfair sales law 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 unfairly divert trade from a competitor.

This bill creates different minimum markup requirements for sellers of motor vehicle fuel from those in current law. The minimum markup requirements under the bill for retail sales of motor vehicle fuel vary depending on various factors, including whether the retail seller is owned or operated by a refiner or wholesaler of motor vehicle fuel. Depending on those factors, the minimum markup under the bill for retail motor vehicle fuel sales is generally 6% over the cost of the motor vehicle fuel to the retail seller, 6% or 9.18% over the retail seller's lowest selling price or 9.18% over the average posted terminal price. The average posted terminal price is the average posted price at which motor vehicle fuel is sold at a motor vehicle storage and distribution facility that is supplied by a pipeline or marine vessel, from which facility motor vehicle fuel may be removed at rack and from which facility 5 or more refiners sell motor vehicle fuel.

The minimum markup requirements under the bill for a wholesaler of motor vehicle fuel are generally 3% over the wholesaler's cost or 3% over the average posted terminal price, whichever is greater.

The bill also provides that a person may be liable for a violation of the minimum markup law if the person is a partner, officer or director of a person who commits a violation. The bill permits a person who is liable for a violation to obtain contribution from any other person who may also be liable for the violation.

Under current law, the department of agriculture, trade and consumer protection (DATCP) or a district attorney may bring an action on behalf of the state to recover a forfeiture against a person who violates the minimum markup law. DATCP may also issue an order requiring certain retailers or wholesalers to cease and desist from violating the minimum markup law. Finally, under current law, DATCP or a district attorney may bring an action to enjoin a violation of the minimum markup law. This bill permits a person who is injured or threatened with injury as a result of a sale or purchase of motor vehicle fuel in violation of the minimum markup law to bring an action against the violator for an injunction, or for the recovery of 3 times the amount of any monetary loss sustained or an amount equal to $2,000 multiplied by each day of continued violation, whichever is greater, plus costs and reasonable attorney fees.

Current law contains certain exceptions to the minimum markup requirements. One of those exceptions provides that the minimum markup requirements do not apply if merchandise is priced in good faith to meet the existing price of a competitor. This bill provides that the exception applies only if the price of motor vehicle fuel is identical to the price of the same motor vehicle fuel sold by a direct competitor at not less than the competitor's cost on the same day, and is established in good faith to meet the competitor's price.

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:

SB414, s. 1 Section 1. 100.30 (2) (a) of the statutes is renumbered 100.30 (2) (am), and 100.30 (2) (am) 1., as renumbered, is amended to read:

SB414,3,13 100.30 (2) (am) 1. With respect to the sale of cigarettes or other tobacco products, fermented malt beverages, or intoxicating liquor or wine, or motor vehicle fuel, "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.

SB414, s. 2 Section 2. 100.30 (2) (a) of the statutes is created to read:

SB414,3,19 100.30 (2) (a) "Average posted terminal price" means the average posted rack price at which motor vehicle fuel is sold at the close of business on the determination date by all refiners at a terminal plus any excise taxes imposed on the motor vehicle fuel or its sale and any cost incurred for transportation and any other fees or charges. In this paragraph, "average" means the arithmetic mean.

SB414, s. 3 Section 3. 100.30 (2) (am) 1m. of the statutes is created to read:

SB414,3,22 100.30 (2) (am) 1m. With respect to the sale of motor vehicle fuel, "cost to retailer" means the following:

SB414,4,10 a. In the case of a retailer who is not owned or operated, either directly or indirectly, by a refiner or by a wholesaler of motor vehicle fuel and who purchases motor vehicle fuel from a refiner or wholesaler of motor vehicle fuel for retail sale at a retail station, the invoice cost of the motor vehicle fuel to the retailer within 10 days prior to the date of sale, or the replacement cost of the motor vehicle fuel, whichever is lower, less all trade discounts except customary discounts for cash, plus any excise, sales or use taxes imposed on the motor vehicle fuel or on the sale of the motor vehicle fuel and any cost incurred for transportation and any other charges not otherwise included in the invoice cost or the replacement cost of the motor vehicle fuel, plus a markup of 6% of that amount to cover a proportionate part of the cost of doing business; or the average posted terminal price at the terminal located closest to the retailer plus a markup of 9.18% of the average posted terminal price to cover a proportionate part of the cost of doing business; whichever is greater.

SB414,4,21 b. In the case of the retail sale of motor vehicle fuel by a refiner at a retail station owned or operated either directly or indirectly by the refiner, the refiner's lowest selling price to other retailers or to wholesalers of motor vehicle fuel on the date of the refiner's retail sale, less all trade discounts except customary discounts for cash, plus any excise, sales or use taxes imposed on the motor vehicle fuel or on its sale and any cost incurred for transportation and any other charges not otherwise included in the invoice cost of the motor vehicle fuel, plus a markup of 9.18% of that amount to cover a proportionate part of the cost of doing business; or the average posted terminal price at the terminal located closest to the retail station plus a markup of 9.18% of the average posted terminal price to cover a proportionate part of the cost of doing business; whichever is greater.

SB414,5,8 c. In the case of the retail sale of motor vehicle fuel by a wholesaler of motor vehicle fuel at a retail station owned or operated either directly or indirectly by the wholesaler of motor vehicle fuel, the wholesaler of motor vehicle fuel's lowest selling price to other retailers on the date of the wholesaler of motor vehicle fuel's retail sale less all trade discounts except customary discounts for cash, plus any excise, sales or use taxes imposed on the motor vehicle fuel or on its sale and any cost incurred for transportation and any other charges not otherwise included in the invoice cost of the motor vehicle fuel, plus a markup of 6% of that amount to cover a proportionate part of the cost of doing business; or the average posted terminal price at the terminal located closest to the retail station plus a markup of 9.18% of the average posted terminal price to cover a proportionate part of the cost of doing business; whichever is greater.

SB414,5,12 d. In the case of a retail sale of motor vehicle fuel at a retail station by a person not described in subd. 1. a. to c., the average posted terminal price at the terminal located closest to the retail station plus a markup of 9.18% of the average posted terminal price to cover a proportionate part of the cost of doing business.

SB414,5,23 e. In the case of a retail sale of motor vehicle fuel at a place other than a retail station, the invoice cost of the motor vehicle fuel to the retailer within 10 days prior to the date of the sale, or the replacement cost of the motor vehicle fuel, whichever is lower, less all trade discounts except customary discounts for cash, plus any excise, sales or use taxes imposed on the motor vehicle fuel or on its sale and any cost incurred for transportation and any other charges not otherwise included in the invoice cost or the replacement cost of the motor vehicle fuel, plus a markup of 3% of that amount to cover a proportionate part of the cost of doing business; or the average posted terminal price at the terminal located closest to the place of delivery plus a markup of 3% of the average posted terminal price to cover a proportionate part of the cost of doing business; whichever is greater.

SB414, s. 4 Section 4. 100.30 (2) (b) of the statutes is amended to read:

SB414,6,13 100.30 (2) (b) "Cost to retailer" and, "cost to wholesaler" and "cost to wholesaler of motor vehicle fuel" as defined in pars. (a) and (am), (c) and (cb) mean bona fide costs; and purchases made by retailers and, wholesalers and wholesalers of motor vehicle fuel 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 and cost to the wholesaler of motor vehicle fuel. 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 purchases of motor vehicle fuel are made by retailers and wholesalers of motor vehicle fuel cannot be justified by prevailing market conditions in this state when they are below the average posted terminal price.

SB414, s. 5 Section 5. 100.30 (2) (c) 1. a. of the statutes is amended to read:

SB414,7,2 100.30 (2) (c) 1. a. With respect to the sale of cigarettes or other tobacco products, fermented malt beverages, or intoxicating liquor or wine, or motor vehicle fuel, "cost to wholesaler" means, except as provided in subd. 1. b., 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.

SB414, s. 6 Section 6. 100.30 (2) (cb) of the statutes is created to read:

SB414,7,15 100.30 (2) (cb) With respect to the sale of motor vehicle fuel, "cost to wholesaler of motor vehicle fuel" means the invoice cost of the motor vehicle fuel to the wholesaler of motor vehicle fuel within 10 days prior to the date of the sale or the replacement cost of the motor vehicle fuel, whichever is lower, less all trade discounts except customary discounts for cash, plus any excise, sales or use taxes imposed on the motor vehicle fuel or on its sale and any cost incurred for transportation and any other charges not otherwise included in the invoice cost or the replacement cost of the motor vehicle fuel, plus a markup of 3% of that amount to cover a proportionate part of the cost of doing business; or the average posted terminal price at the terminal located closest to the place of delivery plus a markup of 3% of the average posted terminal price to cover a proportionate part of the cost of doing business; whichever is greater.

SB414, s. 7 Section 7. 100.30 (2) (cg) of the statutes is created to read:

SB414,7,19 100.30 (2) (cg) 1. Except as provided in subd. 2., "determination date" is the day preceding the day of the sale of motor vehicle fuel by a retailer or wholesaler of motor vehicle fuel.

SB414,7,25 2. If a retailer or a wholesaler of motor vehicle fuel sells motor vehicle fuel on a day other than the day on which the retailer or wholesaler of motor vehicle fuel last purchased any motor vehicle fuel and the sale of the motor vehicle fuel by the retailer or wholesaler of motor vehicle fuel occurs no later than 10 days after its last purchase by the retailer or wholesaler of motor vehicle fuel, "determination date" means any of the following dates selected by the retailer or the wholesaler of motor vehicle fuel:

SB414,8,2 a. The day preceding the day of the sale of motor vehicle fuel by the retailer or wholesaler of motor vehicle fuel.

SB414,8,4 b. The day on which motor vehicle fuel was last purchased by the retailer or wholesaler of motor vehicle fuel.

SB414, s. 8 Section 8. 100.30 (2) (cm) of the statutes is created to read:

SB414,8,8 100.30 (2) (cm) "Refiner" means a manufacturer, producer or refiner of motor vehicle fuel or a person who purchases motor vehicle fuel for sale to wholesalers of motor vehicle fuel.

SB414, s. 9 Section 9. 100.30 (2) (d) of the statutes is amended to read:

SB414,8,14 100.30 (2) (d) "Replacement cost" means the cost computed as specified in par. (a) or (am), (c) or (cb) 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.

SB414, s. 10 Section 10. 100.30 (2) (j) of the statutes is created to read:

SB414,8,19 100.30 (2) (j) "Terminal" means a motor vehicle fuel storage and distribution facility that is supplied by a pipeline or marine vessel, from which facility motor vehicle fuel may be removed at a rack and from which facility at least 5 refiners sell motor vehicle fuel

SB414, s. 11 Section 11. 100.30 (2) (L) (intro.) of the statutes is amended to read:

SB414,8,24 100.30 (2) (L) (intro.) "Wholesaler" includes every person holding a permit as a multiple retailer under s. 139.30 (8) and every person engaged in the business of making sales at wholesale, other than sales of motor vehicle fuel at wholesale, within this state except as follows:

SB414, s. 12 Section 12. 100.30 (2) (m) of the statutes is created to read:

SB414,9,1 100.30 (2) (m) "Wholesaler of motor vehicle fuel" includes all of the following: