Michigan-based Meijer, which began the supercenter combination of a general merchandise store and a supermarket in 1962, began its expansion into Wisconsin in late June, and officially opened its second wave of Wisconsin stores today. As is often the case with new stores, Meijer is holding a “grand opening” sale. Enter the heavy hand of government. From the MacIver News Service:

Likely in an attempt to break into the new market, Meijer is allegedly advertising and selling products for less than cost. In Wisconsin, however, that practice is illegal under the Unfair Sales Act – also known as the minimum markup law.

With many of the stores just opening, the state’s Department of Agriculture, Trade and Consumer Protection (DATCP) is already investigating the company to see if the claims hold water.

The violation, if true, could result in Meijer being fined per infraction for engaging in an action that state statutes call “deceptive” and “unfair.”

Under the portion of the Unfair Sales Act under which the DATCP is investigating no less than four separate complaints, retailers (and wholesalers) are prohibited from selling any item “below cost” as a “loss leader”. Between 1939, when the Unfair Sales Act was created, and 1986, this included all groceries, including perishable items. In 1986, after grocers turned against the law, perishable groceries were exempted. That is a key item, as three of the four items MacIver specifically mentioned as part of the complaints, milk, yogurt and frozen pizza, are perishable groceries.

MacIver also noted that the anti-loss-leader portion of the law, unique to Wisconsin, keeps Walmart from fully offering their $4 generic prescription drug program in Wisconsin. It goes further than that – retailers have to radically alter their national Black Friday promotions to keep from running afoul of the New Deal-era law.

While there has been some failed efforts to “reform” the law since the mid-1990s, those efforts have been mostly limited to the even-more-odious minimum markup on motor fuels. That portion requires gasoline stations to charge 9.18% more than the current price at the nearest wholesale terminal.

Tags: economy retail