The Unfair Sales Act
Wis.Stats s. 100.30, The Unfair Sales Act and Wis. Adm. CodeCH. ATCP 105, Sales Below Cost
Commonly referred to as the "Minimum Markup Law," is a general trade practice regulation prohibiting sales below cost. The law 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 law provides the following:
- General merchandise other than alcoholic beverages, cigarettes and other tobacco products may not be sold at less than cost by either wholesalers or retailers. “Cost” is defined as invoice cost or replacement cost whichever is lower, less all trade discounts, plus any excise taxes and any cost incurred for transportation and any other charges not otherwise included in the invoice cost or replacement cost of the merchandise.
- Alcohol or tobacco products may not be sold at less than cost by either wholesalers or retailers. The definition of “cost” includes a presumptive 3% markup by wholesalers and presumptive 6% markup by retailers. Cost for wholesalers who operate retail outlets or retailers who purchase directly from the manufacturer includes a 9.18% markup (3% plus 6% compounded).
- S. 100.30, Wis. Stats treats motor vehicle fuel separately. For retail sales of motor vehicle fuel, the definition of “cost” relies on the “average posted terminal price” and includes a 9.18% markup over this amount. Although there have been multiple lawsuits challenging the validity of the law, including the most recent one filed by Flying J, the law as described above is the current law.
- Violations of the law may result in a special order issued by the department or a court ordered civil forfeiture of $50 to $500 for the first violation and $200 to $2500 for each subsequent violation. Sellers of motor vehicle fuel and/or tobacco products may file a private cause of action to seek damages if they are injured by a competitor's price.
- Exceptions to the law are made to allow for matching a competitor's price, clearance and final liquidation sales, sales of damaged merchandise and perishables, contracted governmental institution sales and for merchandise sold to charitable or relief agencies.
The Unfair Sales Act applies only to the sale of goods; services are not covered.
Wis.Stats. s. 100.18(8), Fraudulent Representation
- Regarding Motor Vehicle Fuel:
- At each retail place of business, a price has to be posted in a conspicuous place, most accessible to the public at his or her place of business and on every pump.
- Once a price has been posted it must remain in effect for at least 24 hours.
- It is considered deceptive advertising to advertise a sale price for retail less than the price posted on each pump.
Investigations into potential violations of the Unfair Sales Act and Fraudulent Representations are generally prompted by written complaints submitted by merchants or consumers. Staff reviews the complaints for applicability of the statute and prioritizes the investigations based on potential market injury. Investigations can consist of interviews with witnesses and review of financial documents, such as invoices, shipping manifests, and records of price changes.
The Unfair Sales Act Complaint Questionnaire
Motor Vehicle Fuel Unfair Sales Act Complaint Questionnaire
Notice of Meeting Competition Form
Fraudulent Representation Complaint Questionnaire
When data collection phase is completed, investigators summarize their findings and recommend case disposition. The recommendations may be reviewed by a supervisor and returned to the investigator for follow-up. Follow-up may consist of drafting warning letters, preparing special orders or court papers, closing the case with no violation, etc. Upon conclusion of the investigation, the investigatorwill notify the complainant of the results. Once a case is concluded documents created or obtained through the investigative process become public record. The complaint form record received to initiate an investigation is a public record at anytime.
For further information please contact the Trade Practices staff at (608) 224-4925 or (608) 224-4989.