Register November 2006 No. 611
Chapter ATCP 105
SALES BELOW COST
Subchapter I — General Provisions
ATCP 105.001 Definitions. ATCP 105.003 Retailers purchasing directly from manufacturers or producers. ATCP 105.004 Cigarette multiple retailers. ATCP 105.005 Retailers selling to other retailers. ATCP 105.007 Calculating the cost of merchandise. ATCP 105.009 Meeting competition. Subchapter II — Cigarette Pricing
ATCP 105.03 Determining the cost of doing business. ATCP 105.04 Period of time to compute expenses. ATCP 105.05 Allocation methods. ATCP 105.06 Average expense allocation. ATCP 105.07 Factors for allocating expenses. ATCP 105.08 Application of discounts and allowances. ATCP 105.09 Specific expense allocation. ATCP 105.10 Applicability. Subchapter III — Motor Fuel Pricing
ATCP 105.21 Calculating cost of motor fuel. ATCP 105.22 Unavailability of average posted terminal price for fuel sold. ATCP 105.23 Notice of price offered to meet competition. Ch. ATCP 105 NoteNote: Chapter Ag 119 was created on an emergency rule effective June 23, 1987; Chapter Ag 119 was renumbered chapter ATCP 105 under s. 13.93 (2m) (b) 1., Stats., Register, April, 1993, No. 448. ATCP 105.001ATCP 105.001 Definitions. Except as otherwise provided, the definitions specified in s. 100.30 (2), Stats., apply to this chapter. In this chapter and in s. 100.30, Stats.: ATCP 105.001(1)(1) “Customary discounts for cash” includes all discounts offered to a wholesaler or retailer that are conditioned on payment within a certain time. ATCP 105.001(2)(2) “Department” means the Wisconsin department of agriculture, trade and consumer protection. ATCP 105.001(3)(3) “Excise taxes” includes state and federal excise taxes, petroleum inspection fees, and state and federal assessments on petroleum products to fund leaking underground storage tank programs. ATCP 105.001(4)(4) “Motor vehicle fuel” means any liquid prepared, advertised, or sold for use as, or commonly and commercially used as, a fuel in internal combustion engines. ATCP 105.001(5)(5) “Replacement cost of the merchandise” means the price to the wholesaler or retailer meeting all of the following requirements: ATCP 105.001(5)(a)(a) The price is for the same merchandise as the merchandise whose cost is in question. ATCP 105.001(5)(b)(b) The price is available for merchandise if bought in the same quantity as the quantity purchased on the most recent date before the date of the sale in question. ATCP 105.001(5)(c)(c) The price was available between 2 dates: the date of the sale in question and the date, before this sale, when the wholesaler or retailer last purchased the same merchandise. ATCP 105.001(6)(6) “Terminal” means, for purposes of subch. III of ch. ATCP 105, a terminal under s. 100.30 (2) (j), Stats., or group of terminals, under s. 100.30 (2m) (c), Stats., for which a petroleum price reporting service routinely lists, on most days, prices offered by at least 3 refiners or wholesalers of motor vehicle fuel. ATCP 105.001 HistoryHistory: Cr. Register, August, 1990, No. 416, eff. 9-1-90; cr. (4m) and (6), Register, May, 1999, No. 521, eff. 6-1-99. ATCP 105.003ATCP 105.003 Retailers purchasing directly from manufacturers or producers. A retailer who purchases cigarettes and other tobacco products, fermented malt beverages, intoxicating liquor, or wine directly from a manufacturer or producer shall compound the wholesaler markup with the retailer markup to determine the total markup on the merchandise. ATCP 105.003 NoteNote: Section 100.30 (2) (f), Stats., requires that markups be compounded when a retailer buys directly from the manufacturer or producer, thus acting both as a wholesaler and a retailer. In the absence of proof of a lesser cost of doing business, a wholesaler’s markup is at least 3% and a retailer’s markup is at least 6%, making the product’s total compounded markup at least 9.18%. ATCP 105.003 HistoryHistory: Cr. Register, August, 1990, No. 416, eff. 9-1-90; am., Register, May, 1999, No. 521, eff. 6-1-99. ATCP 105.004ATCP 105.004 Cigarette multiple retailers. A cigarette multiple retailer, as defined in s. 139.30 (8), Stats., who purchases cigarettes from a wholesaler shall compute the minimum selling price by adding the wholesaler markup, compounded with the retailer markup, to the price of the cigarettes the manufacturer charged the wholesaler. ATCP 105.004 NoteNote: Section 100.30 (2) (L) 2, Stats., defines cigarette multiple retailers as wholesalers. This permits other cigarette wholesalers (jobbers and distributors) to sell to multiple retailers with no markup, because ss. 100.30 (2) (c) 1. a and b., Stats., which specify when jobbers and distributors must add a wholesale markup, do not cover sales between wholesalers. Under s. 100.30 (2) (f), Stats., cigarette multiple retailers who have purchased from jobbers or distributors must apply both the wholesale and the retail markups. This rule consolidates the provisions of these statutes by requiring the use of a compounded markup. This rule also directs cigarette multiple retailers to use the manufacturer’s price as the basis of their cost calculations, which is required by s. 100.30 (2) (c) 1. b., Stats. ATCP 105.004 NoteIn the absence of proof of a lesser cost of doing business, a wholesaler’s markup is at least 3% and a retailer’s markup is at least 6%, making the total compounded markup for cigarettes sold under this rule at least 9.18%.
ATCP 105.004 HistoryHistory: Cr. Register, August, 1990, No. 416, eff. 9-1-90. ATCP 105.005ATCP 105.005 Retailers selling to other retailers. ATCP 105.005(1)(1) Non-manufacturers and non-producers. In order to determine the selling price to its own retail customers, a non-manufacturing or non-producing retailer of cigarettes and other tobacco products, fermented malt beverages, intoxicating liquor, or wine who sells to other retailers shall use the selling price for the sales to other retailers plus at least the minimum retailer markup. ATCP 105.005 NoteNote: Under s. ATCP 105.005 (1) and s. 100.30 (2m) (b), Stats., if retailer A sells cigarettes or other named merchandise to retailer B at a 10% markup, when retailer A sells at retail to A’s own customers the minimum retail markup must be 10% compounded with 6% (absent proof of a lesser cost of doing business), or 16.6%. ATCP 105.005(2)(2) Manufacturers and producers. In order to determine the selling price to its own retail customers, a manufacturer or producer of cigarettes and other tobacco products, fermented malt beverages, intoxicating liquor, or wine who acts as both a wholesaler and a retailer shall use its selling price to other retailers plus the wholesaler markup compounded with the retailer markup. ATCP 105.005 NoteNote: Under s. ATCP 105.005 (2) and s. 100.30 (2m) (b), Stats., an integrated manufacturer-wholesaler-retailer who sells to an independent retailer must compound the wholesale and retail markups over its selling price to independent retailers, in order to determine its selling price to its own retail customers. In the absence of proof of a lesser cost of doing business, the wholesale markup is at least 3% and the retail markup is at least 6%, making the product’s total compounded markup at least 9.18%. ATCP 105.005 HistoryHistory: Cr. Register, August, 1990, No. 416, eff. 9-1-90; am., Register, May, 1999, No. 521, eff. 6-1-99; CR 14-047: am. (2) Register May 2015 No. 713, eff. 6-1-15. ATCP 105.007ATCP 105.007 Calculating the cost of merchandise. ATCP 105.007(1)(a)(a) Except as provided in par. (b), the invoice cost of merchandise sold at wholesale or retail shall be calculated by examining the cost shown on the most recent invoices of the merchandise. ATCP 105.007(1)(b)(b) The invoice cost of cigarettes and other tobacco products, fermented malt beverages, intoxicating liquor, wine, or motor vehicle fuel, whether sold at wholesale or retail, shall be calculated by examining the cost shown on the invoices of the product actually being sold. Invoices of product purchased more than 30 days before the date of sale may not be used. For the purposes of this paragraph, wholesalers and retailers of these products shall use the first-in first-out accounting method when determining what product is actually being sold. ATCP 105.007 NoteNote: Section 100.30 (2) (am) 1. and (c) 1. a, Stats., calculate the retail and wholesale cost of cigarettes and other named products according to the “invoice cost of the merchandise... within 30 days prior to the date of sale.” Some of these products, however, turn over and change prices so rapidly that a 30-day old invoice may not reasonably compare to the cost of product actually being sold. For example, a tanker load of motor vehicle fuel may sell within three to four days. In periods of rising prices, using a 30-day old invoice would create an artificially low price for motor vehicle fuel and would not be a “bona fide cost”, as required by s. 100.30 (2) (b), Stats. ATCP 105.007 NoteIf a retailer of cigarettes or other named products has not purchased merchandise within 30 days before the date of sale, the retailer must use “replacement cost” as the basis for determining prices.
ATCP 105.007(3)(a)(a) In this subsection, “trade discount”means a manufacturer’s or wholesaler’s payment or allowance, either deducted from the purchase price or subsequently paid. ATCP 105.007(3)(b)(b) A trade discount may be considered as a reduction from invoice or replacement cost if all of the following exist: ATCP 105.007(3)(b)2.2. The trade discount is calculated on the basis of the quantity or dollar amount of merchandise actually purchased or sold. ATCP 105.007(3)(b)4.4. In the case of retail sales of fermented malt beverages, intoxicating liquor, or wine, the trade discount is not in the form of cash, a check, or other equivalent in ready money or merchandise. ATCP 105.007 NoteNote: The trade discount provisions in this subsection apply only to calculations of the cost of merchandise, not calculations of the cost of doing business. Section ATCP 105.08 specifies rules for using discounts when cigarette jobbers or distributors calculate the cost of doing business. The following examples describe the effect of this subsection: ATCP 105.007 Note(1) An advertising allowance of 20¢ per unit purchased may be considered a cost reduction. An advertising allowance of a flat $1,000 is not a cost reduction.
ATCP 105.007 Note(2) A trade allowance calculated on the basis of quantity sold between April 1 and September 30 may not be used as a cost reduction until September 30, unless the retailer earns the full allowance prior to that date.
ATCP 105.007 HistoryHistory: Cr. Register, August, 1990, No. 416, eff. 9-1-90; r. (2), Register, May, 1999, No. 521, eff. 6-1-99. ATCP 105.009(1)(1) Existing price. A price for merchandise meets an existing price of a competitor under s. 100.30 (6) (a) 7., Stats., only if the merchandise in question is sold on a day when the competitor’s price is in effect and is offered under the same terms and conditions as the competitor’s offer. ATCP 105.009 NoteNote: Under this subsection, if a merchant offers a price reduction with the redemption of a coupon, another merchant can meet this competition with a similar coupon promotion — simply dropping the price of the product, without any coupon redemption, would not be an offer under “the same terms and conditions.”
ATCP 105.009(2)(2) Holders of cigarette permits. A person who holds a cigarette permit under subch. II of ch. 139, Stats., and who also sells merchandise other than cigarettes may reduce the price of the other merchandise to meet a competitor’s existing price, in accordance with the exemption specified in s. 100.30 (6) (a) 7., Stats. Section 100.30 (6) (c) and (d), Stats., which prohibit persons holding these cigarette permits from claiming this exemption, apply only to the sale of cigarettes. ATCP 105.009(3)(3) Surveys. A wholesaler or retailer who conducts a survey of competitor’s prices in the following manner may rely on the survey of competitor’s existing prices as proof of sale under s. 100.30 (6) (a) 7., Stats., if the department finds the survey to be accurate. Such a survey shall include:
