MacIver News Service

By M.D. Kittle

MADISON, Wis. – An army of blue descended on the Capitol Wednesday, some 100 Walmart employees backing a bill that would repeal portions of Wisconsin’s antiquated “minimum markup law.”

Their collective message: Always Low Prices – Except in Wisconsin.

The Senate Committee on Agriculture, Small Business and Tourism held a hearing on a bill that would begin to scale back the anti-free-market law on Wisconsin’s books since the Great Depression. Scores of supporters of the measure filled the hallway outside the packed conference room.

Senate Bill 263 would eliminate the prohibition on retailers and wholesalers selling prescription drugs and general merchandise at below cost under Wisconsin’s antiquated Unfair Sales Act, commonly known as the “minimum markup law.”

Motor fuel, tobacco products, booze and grocery items would still be on the hook for state-mandated higher prices, but reform supporters say the bill is a good first step in reversing an 80-year-old, protectionist relic.

“What are you hoping to accomplish by keeping this outdated law on the books?” Todd Peterson, the regional general manager for Walmart Stores in Wisconsin, asked the committee.

Peterson and his colleague, Lisa Nelson, testified that much has changed since the Unfair Sales Act was put in place to protect small mom-and-pop stores from predatory pricing practices by bigger chains.

But applying an early 20th Century law to the 21st Century digital age makes little sense. In today’s Internet-heavy retail world, Wisconsin’s minimum markup law punishes Badger State brick and mortar stores that, unlike online merchants, can’t offer deep discounts on the products they sell.

“Competition looks a lot different than it did in 1939,” said Nelson, Walmart director of government relations. “I have heard some businesses have built their entire business model around this law so it can’t be changed. Think about that: Building an entire business on a law passed in 1939.”

Cue the usual dire warnings from the minimum markup defender, the usual retailers that have much to lose if they lose the ability to artificially inflate prices, protecting their higher profit lines at a cost to consumers.

“If you repeal the Unfair Sales Act, you will see your hometown grocer go out of business,” insisted Brandon Scholz, president and CEO of the Wisconsin Grocers Association.

And Scholz stands in solidarity with the Wisconsin Petroleum Marketers & Convenience Store Association. The organization’s lobbyist echoed the same rhetoric.

“We oppose any attempt to weaken the law because we believe any attack on Wisconsin industry is an attack on all industry,” the association’s Douglas Parrott said. “The law is about promoting competition, more choices for consumers.”

“What’s not working in Wisconsin?” the lobbyist asked.

Plenty, say opponents of the law.

The Unfair Sales Act mandates that prices on gas, tobacco products and alcohol be marked up as high as 9.18 percent. And the kinds of doorbuster Black Friday deals and discount prices consumers are accustomed to in other states are illegal in Wisconsin.

State Rep. Jim Ott (R-Mequon), a co-sponsor of the reform legislation, noted the agency enforcing the law is the Department of Agriculture, Trade, and CONSUMER PROTECTION.

“What consumers are we protecting by having a state agency do their job by telling a business to sell products at a higher price than they need to or want to?” Ott said.

The reform measure would end the restriction on discounting prescription drugs, which could result in a noticeable savings for some consumers.

“Believe me, even a few dollars on a monthly prescription for someone on a fixed income is a big deal,” Walmart’s Nelson said.

The Pharmacy Society of Wisconsin is opposed to the reform legislation. Its members worry about what lifting the regulations would do to the small town pharmacy, and to the health of consumers pharmacy shopping.

“Prescription medications are not a commodity and should not be treated as such,” Matthew Mable, president-elect of the Pharmacy Society, told the committee.

Sen. Leah Vukmir (R-Brookfield), the bill’s co-author, said the minimum markup law is government interference that stymies business and ultimately hurts consumers.

Committee member Sen. Mark Miller (D-Monona) defended the 80-year-old law, noting the that state government interferes in the marketplace all the time.

“The interfering in the free market is not a damnation,” Miller said, describing government interference as a public good.

While the chances appear long that the Legislature will vote on the reform bill, Vukmir is encouraged at least has received a public hearing – something previous measures did not get.

“I have waited for this for a long time,” Vukmir said.

M.D. Kittle is an Investigative Reporter with the MacIver Institute. This article appears courtesy of the MacIver Institute.