Saturday, August 24th, 2019

End antiquated minimum markup law

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End antiquated minimum markup law

Special interests trying to keep state consumers paying more

When you’re charged with defending the indefensible, the best strategy is to have someone else make the issue go away. That was the strategy of the special interests opposed to the repeal of the minimum markup law, also known as the Unfair Sales Act. They tried to have their allies in the state Legislature bury the bill in a desk drawer, but now efforts to repeal the law have some momentum.

The minimum markup law in Wisconsin requires wholesalers and retailers to charge above cost. For gas and alcohol, the minimum markup required by law is actually higher. This vestige of Great Depression-era price-fixing means that Wisconsin consumers will always pay more than the cost of the item, even if retailers are willing to charge less on certain items just to get people into the store.

There was a renewed push to repeal the archaic law after the grocery store chain Meijer began moving into Wisconsin. To introduce Wisconsinites to their stores they ran some pretty good sales on certain items like coffee. That caused Woodman’s to complain Meijer was in violation of the minimum markup law.

Groups like the Wisconsin Petroleum Marketers and Convenience Store Association and the Wisconsin Grocers Association are lobbying against the bill. They want you to believe that paying higher prices is actually good for the consumer. They claim it’s to protect smaller businesses from the big chains using “predatory” pricing. However, that’s a bit silly coming from their members like Kwik Trip and Woodman’s.

Because of the successful lobbying efforts by special interests, Wisconsinites will once again be heading into the holiday season paying higher prices than residents in nearby states. Stores will not be allowed to sell turkeys below cost, as some stores do in Illinois, to get shoppers in to buy other items for Thanksgiving dinner. The wine at dinner will cost more. Even the drive to grandma’s house will cost more because of the state requirement that prices be marked up to the acceptable level.

After dinner, the shoppers in the family will be disappointed to learn that while there are great Black Friday deals, the door-buster deals across the border are even better. Best Buy and Walmart have actually run different newspaper inserts in Minnesota and Illinois because they can’t offer the same deals here in Wisconsin.

Brandon Scholz of the Wisconsin Grocers Association has an interesting solution, though I don’t think it will help the little retailer he claims the law will protect. He told the Milwaukee CBS affiliate, “You can go online and find tremendous deals whether it’s Amazon, or if you online shop at your local grocery story or online shop at other retail stores or sporting good stores.” That’s right, Scholz is suggesting that Wisconsin consumers shop at that tiny retailer Amazon.

But it’s not just Thanksgiving and Christmas shoppers that are beaten by the minimum markup Grinch. We are beaten year-round by this law that drives up the cost of gasoline for our vehicles, drives up the prices for alcohol, and even stops stores from offering deep discounts on back-to-school supplies.

This should be an easy issue for Republicans who control the Legislature. Their free-market principles should cause them to abhor government- mandated price-fixing. They should also be willing to repeal the minimum markup law because it directly affects household disposable income. Paying unnecessarily higher prices for food and gasoline goes right to the Wisconsin household bottom line.

Instead Republican leadership has dragged their feet on repealing the minimum markup law. Perhaps it’s to squeeze one more contribution out of the special interests opposed to giving consumers a break.

But Republican voters should demand public hearings on repealing the minimum markup law. Let Woodman’s, Kwik Trip, and every other special interest try to defend charging Wisconsin consumers higher prices. Let them explain how government price-fixing is somehow good for us. It should be an entertaining holiday show.

(James Wigderson is a blogger publishing at http://www.wigderson.com and a Waukesha resident. His column runs Thursdays in The Freeman.)

 

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