“Our prices are so low, we’re being investigated by the state!”
Sounds like a heck of an advertising slogan. But it’s one that Michigan-based Meijer can use, now that state officials in neighboring Wisconsin are indeed investigating whether the store’s prices are too low.
Wisconsin is one of a handful of states with a “minimum markup law” that prevents retailers from selling products below cost. The idea behind the decades-old regulations are to protect consumers from predatory sellers who slash prices to crush their competitors (and then raise them again when their competitors go out of business).
These days, minimum pricing mostly affects commodities like gas, alcohol, tobacco and prescription medicine. But technically, groceries are also covered by Wisconsin’s “Unfair Sales Act”. So, upon seeing a recent Meijer sales ad in Wisconsin, a Milwaukee attorney filed several complaints with the state Department of Agriculture, Trade and Consumer Protection.
How low is too low, exactly?
When Meijer opened its first stores in Wisconsin earlier this summer, it advertised “grand opening” sale prices including bananas for 28 cents a pound, $1.50 for a box of Pop Tarts, $3 for a 12-pack of Pepsi, $1.88 for a box of Cheerios and $1.99 for a gallon of milk.
Pretty decent prices, yes – but predatory?
Those items, and dozens of others, were “clearly less than cost,” according to a complaint filed by attorney Jerry Gonzalez, on behalf of an unnamed retail client. “Meijer is making no effort to curb below cost pricing.”
The Unfair Sales Act “considers the practice of selling below cost to attract patronage a form of deceptive advertising, which diverts business from retailers who maintain a fair pricing policy, ultimately resulting in lessened competition and market disruption.”
The state has launched an investigation into Gonzalez’s five separate complaints. If found to be in violation, Meijer could be fined up to $500 for the first violation and $2,500 for each subsequent violation.
Meijer countered by saying its grand opening sales in Wisconsin were consistent with grand opening prices offered in other markets, albeit not in states with minimum markup laws. “We are not accustomed to regulations that limit our customers’ ability to save money when they shop with us,” a store spokesman said in a statement.
Many critics have long complained that Wisconsin’s law has outlived its usefulness. There have been several, so far unsuccessful, efforts over the years to repeal the regulations. Even stores like Walmart have complained that the law hampers its ability to save consumers money. During one effort to repeal the law several years ago, Walmart estimated that Wisconsin residents could save $35 million a year on prescription drug prices alone, if there was no minimum markup.
The fact that Gonzalez is representing a retail client – a Meijer competitor – may lead some to question his motives. But the law is what it is, and unless it’s repealed, everyone has to play by the same rules. “We believe Meijer’s failure to adhere to the requirements of the Unfair Sales Act is resulting in injury to my client and other businesses adhering to Wisconsin law,” Gonzalez said in one of his complaints.
So if you find that the deals don’t seem to be as good as they used to be anymore, check your state’s statutes. If you’re paying too much for your Pop Tarts and Pepsi – you may have your own state lawmakers to thank.
This wisconsin law is a joke. Meijer has awesome deals but they do not double coupons here in Chicago like Schnucks.
I agree. This Wisconsin law is so stupid. Politicians are only interested in making money for themselves instead of helping consumers.