A conservative group is trying to overturn a 75-year-old Wisconsin law that bans retailers from selling items below cost by challenging it in a rural Wisconsin court.
The Wisconsin Institute for Law & Liberty's lawsuit challenges the Unfair Sales Act, also known as the state's minimum markup law.
The law is based on the argument that selling goods below cost is a form of deceptive advertising, taking patronage away from retailers who keep fair prices, "ultimately resulting in lessened competition and market disruption," according to the state Department of Agriculture, Trade and Consumer Protection.
The law covers general merchandise, and also implements a mandatory markup on alcohol and tobacco products and motor vehicle fuel.
Under the law, retailers are allowed to match a competitor's price, and exceptions are made for clearance and final liquidation sales.
Passed in 1939 on the heels of the Great Depression, the law was designed to protect small businesses from encroaching large retailers. Wisconsin is one of 16 states with minimum markup laws on the books, according to the National Conference of State Legislatures.
Opponents of the law say it's anti-free market. They argue it artificially inflates prices and stifles competition, forcing consumers to pay more and impeding retailers aiming to break into a market or expand.
The law's supporters say it maintains a fair market that allows small businesses to thrive. Repealing it, they say, would benefit large retailers who can afford to sell below cost for an extended period of time.
The state Department of Justice announced Wednesday it plans to defend the law.
WILL is representing Krist Oil and Robert Lotto in the case, which argues the law contradicts the state constitution's "guarantee to earn a living and to benefit from free markets."
Krist Oil operates gas stations and convenience stores in Wisconsin, Michigan and Minnesota — including one in Eagle River, not far from the Wisconsin-Upper Michigan border. Lotto lives and buys gas in Green Bay.
WILL filed the case in Vilas County, president and general counsel Rick Esenberg said, because Krist does business there.
The law has withstood several previous legal challenges, but Esenberg argued WILL's approach is different this time, focusing only on the state constitution.
Efforts have been made to repeal the law in the Legislature, as recently as last session.
Esenberg said that's the result of "crony capitalists ... working the Legislature to get what they want."
"It’s not the job of the Legislature to pick winners and losers," Esenberg said.
Big-box stores like Walmart say the law keeps them from offering the lowest-possible prices, and AAA says it keeps gas prices higher than they ought to be.
Meanwhile, groups like the Wisconsin Grocers Association, Pharmacy Society of Wisconsin, Tavern League of Wisconsin, Wisconsin Beer Distributors Association, Wisconsin Restaurant Association, Kwik Trip and the Cooperative Network support keeping it on the books, arguing that without it, independent business would be threatened.