Back-to-school season is a great time to stock up on deeply-discounted supplies. In some places, though, the back-to-school sales – and indeed, most sales – aren’t so spectacular. That’s why a citizen, an oil company and an advocacy group are now suing the state of Wisconsin, demanding lower prices on everything from school supplies, to gas, to groceries.
Just take a look at Walmart’s recent back-to-school ad, pictured above. According to a price check conducted by the Wisconsin-based John K. MacIver Institute for Public Policy, that 50-cent composition book actually costs 62 cents in Milwaukee-area Walmart stores. A 10-pack of Crayola markers, advertised as costing just 97 cents, is twice the price in Wisconsin, at $1.94. And the “everyday price” of 50 cents for a pack of Crayola crayons doesn’t apply in the Badger State. Instead, it sells for $1.24 – nearly 150% more.
The reason these items and many others are more expensive in Wisconsin, is the state’s Unfair Sales Act, also known as the minimum markup law. The much-maligned, but long-lived, law forbids sale prices that are too low.
And some fed-up opponents of the law are suing to put an end to it.
“This lawsuit seeks to vindicate the right of Wisconsin businesses to serve their customers free of anticompetitive, arbitrary, and irrational government regulation,” reads a complaint filed last week. “This lawsuit also seeks to vindicate the right of Wisconsin consumers to purchase products at the most competitive price, free from arbitrary and irrational government regulations that drive up prices.”
The suit was filed by the Wisconsin Institute for Law & Liberty, a conservative advocacy group, on behalf of the Krist Oil Company and Green Bay resident Robert Lotto, a Wisconsin consumer. The suit argues that the law forces people like Lotto to pay too much for products that are more inexpensive everywhere else, and forces companies like Krist Oil to charge too much and miss out on the benefits of healthy price competition.
The Depression-era law bans “loss leaders”, by preventing businesses in the state from selling items below cost. The idea is to protect smaller sellers from larger competitors, who might undercut them on price and drive them out of business.
The law gained some attention last year at this time, when Michigan-based Meijer opened its first Wisconsin locations and offered “grand opening” sale prices like $1.99 for a gallon of milk, $1.88 for a box of Cheerios and bananas for 28 cents a pound.
A complainant – later revealed to be rival supermarket chain Woodman’s – reported the prices to the state, arguing they were “clearly below cost”. “We normally don’t turn others into you,” Woodman’s complaint read, “but this is ridiculous!”
Meijer claimed ignorance about the Wisconsin law. “We are not accustomed to regulations that limit our customers’ ability to save money when they shop with us,” a store spokesman said at the time.
That case was, ultimately, quietly closed. According to state records, only a small handful of price complaints lodged against Wisconsin retailers have resulted in penalties in recent years. So while proponents of the law claim it’s still necessary, critics want to know – if the regulations are barely even going to be enforced, what’s the point?
“The Minimum Markup Law places a hidden tax on all Wisconsin consumers,” the complaint filed last week reads. That extra payment “goes straight into the pockets of businesses in the form of a guaranteed profit over their costs,” the complaint goes on. “All it does is protect inefficient firms from more effective competitors, ‘saving’ the citizens of Wisconsin from the dire threat of lower prices.”
Whatever the strengths of their argument, the plaintiffs face an uphill battle. The law has survived nearly a dozen prior constitutional challenges, and countless legislative efforts to rewrite or repeal it.
So as most Wisconsin students head back to school this week, they’ll be doing so with costly crayons and pricey peanut butter sandwiches in their big-ticket backpacks, while their parents learn a lesson in economics, politics and competition that won’t be taught in school – but in the courts.
