GOP Legislators Seek Repeal of Law Used Against Major Donor

September 23, 2015

A GOP proposal to repeal Wisconsin’s minimum markup law has popped up at the State Capitol after complaints were filed with the state that accused Meijer Inc., a Michigan-based grocery store chain whose owners and executives are major Republican donors, of violating the law.

The complaints were based on advertised sales for the opening of two Meijer stores in Kenosha and Grafton in late July. The chain also opened four stores in Milwaukee this summer. The complaints were filed with the Department of Agriculture, Trade and Consumer Protection by a Milwaukee law firm on behalf of an unidentified client. The department has completed investigations on three of the five complaints and sent Meijer an informational letter about the state’s minimum markup law.

Members of the Meijer family and company executives contributed $60,000 to Republican Gov. Scott Walker and the Republican Party of Wisconsin between September 2013 and October 2014. Walker received $40,000, including $10,000 each from Hendrik and Doug Meijer, of Grand Rapids, Mich.; company President James Symancyk, of Grand Rapids; and company executive Mark Murray of Grand Rapids. Hendrik Meijer also contributed $20,000 last October to the state Republican Party.

GOP Sen. Leah Vukmir, of Wauwatosa, and Reps. Jim Ott, of Mequon, and Dave Murphy, of Greenville, began circulating a proposal Sept. 17 to repeal the minimum markup law. Republicans control both houses of the legislature by comfortable margins.

Overall, business interests, which are split on the minimum markup issue, contributed about $2.4 million between January 2011 and December 2014 to Walker and nearly $880,000 to current Republican legislators, including $6,550 to Vukmir, $3,800 to Murphy and $3,250 to Ott.

The minimum markup law, which was passed in 1939 and is formally called the Unfair Sales Act, generally prohibits selling goods below cost and considers the practice a form of deceptive advertising that reduces competition by drawing business away from retailers that price products fairly. For general merchandise and products like gasoline, tobacco, and alcohol, the minimum markup law uses formulas that increase the minimum cost of a product from 3 percent to 9.18 percent to cover part of the seller’s cost of doing business.

The arguments for and against the minimum markup law generally pit large, national, retail chain stores against smaller, stand-alone or family-owned businesses.

Supporters of the minimum markup law, which include grocers, convenience stores, gas stations, cooperatives, and other small businesses claim the law prevents large retail chains from slashing prices below their costs in order to put small operations out of business and create a monopoly in which the survivor may increase prices as much as they choose.

Opponents of the minimum markup law argue it unfairly inflates prices paid by consumers and amounts to a form of government intervention that protects some businesses from the consequences of competing in a free market system.