Having been slapped around pretty hard by the Germans for predatory pricing (see 9/12/00 below), now Wal-Mart has run smack into the same charge in five Wisconsin communities. According to the Milwaukee Journal Sentinel, Wal-Mart was charged on September 25 with cutting prices at a number of its stores in order to illegally take business from competitors. As in Germany, Wal-Mart was low-balling basic staples like milk, butter, detergent and cigarettes. State investigators from the Division of Trade and Consumer Protection detected below-cost pricing at Wal-Marts in West Bend, Racine, Beloit, Tomah and Oshkosh. According to Wisconsin state law, retailers cannot sell items at below cost to unfairly take business away from competitors. Wal-Mart responded to the charges by claiming the company was only reacting to price cuts by other retailers. Responding to a price cut is legal, but initiating predatory pricing is not. The only problem with Wal-Mart’s claim was that they had no proof or records of initiation at other stores. “We did not take the initiative of lowering prices below cost,” Wal-Mart said. “We acknowledge our record-keeping needs to improve.” Wal-Mart told the Journal Sentinel that it has implemented a change in its computer program to document below cost prices. But Wisconsin officials said they went after Wal-Mart only after the company kept up the predatory practice — having been warned to stop since 1993! The state says Wal-Mart DID initiate below cost pricing. Under Wisconsin law, Wal-Mart could face as much as $500 per violation for each of the 350 violations listed by state regulators. The state is now seeking a court injunction to stop Wal-Mart’s below cost selling. If an injunction is granted, and Wal-Mart continues to predatory price, the cost of each violation could rise to $5,000.”We became our own competition,” Sam Walton bragged in his autobiography.
Germany. Wisconsin…How many other places will spend the time trying to respond to complaints that Wal-Mart is intentionally trying to use its size and influence over the market to drive its competitors out of business? It’s not easy to prove, and the sanctions are largely symbolic to a company with the resources of a Wal-Mart. What’s a $175,000 fine to a company that had net sales last year of $167 billion dollars? One of my favorit quotes from Wal-Mart lays out their intentions very clearly: “At Wal-Mart we make dust. Our competitors eat dust.” And once the small and medium-sized merchants are gone, what do you suppose happens to everyday low prices?
