Competition: Fair or Unfair?

Competition: Fair or Unfair?

Running a business is difficult.

First come up with an idea. Then see if it’s accepted.

Next find suppliers for your product. Realize you’ll be doing almost everything out of your home for awhile but know that, at some time, you’ll need an office and warehouse space.

Secure both and find out you now need to pay utilities, phone service, security service. That’s not too bad except you can’t grow much because the work is too much for two people.

So you start looking for help, paying social security taxes, medicare taxes, unemployment taxes, workman’s compensation insurance plus insurance for all the stock you now have.

Finally you’re ready to go. Except you have to raise your prices to cover the cost of rent and employees. OK, that works and you’re still in the ballpark. Except you need to hire more help and you need to get more sales. So you work out an advertising budget and realize that you won’t be making much of a living on what’s left. But you make it work and find yourself growing.

After 5 years you can finally start taking a salary.

Then: BAM!

You find that the 25¢ ruler you’ve been putting in the kits are on sale at Office Max for a penny. What’s worse? They’ve copied your order blanks (so did Walmart, Target and Office Depot), removed your copyright information, and posted them in their store as a convenience to their customers.

Variations on this theme have happened for the last 15 years. An expensive lawyer could probably help you but you can’t afford it. Not unless you want to go another 5 years without getting paid. So you march into the store, complain to the manager and take all the copies with you. Finally the copying stops. But not the pricing problem.

In Wisconsin, we have an “Unfair Sales Act” or “minimum markup law” that prohibits the retail sale of merchandise at a price that is below the seller’s “cost”. As a rule, everything must be marked up by 6%. It also applies to “loss leader” items, those things that make you come into the store to buy cheap crayons as they know you’ll also buy underwear, socks, etc.

So here’s what I did this year. I contacted the Department of Agriculture, Trade and Consumer Protection to file complaints against Target and Shopko. Crayola Markers were being sold by Shopko for 99 cents. The cost is over $1.75. I waited for a response and was finally sent a letter on Sept 17th, stating that Target was not guilty of any infractions since “…we have documentation that shows other businesses at or below the alleged retail price. The “meeting competition defense” is an allowable exception.

Sure glad they don’t check drunk driving. I guess if everyone on the road is drunk the “meeting competition defense” would exempt anyone for a fine. Or, how about the prostitutes that work the streets? If there are two of them would they be exempt since they’re the “meeting competition defense”?

Apparently the date of the infraction is the deal breaker. If no one else is advertising a low price, you break the law. That’s what happened to Shopko who was found in violation of 4 product prices. Of course there wasn’t any penalty. Just a warning not to do it again. I’m sure that it’s as effective with companies as it is with kids.

Just want it to be fair.