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HB 405 - Unfair sales act repeal

HB 405 - Unfair sales act repeal

Phil Haunschild
February 1, 2018

Bill description: HB 405 would repeal the 1939 Unfair Sales Act, which prohibits businesses from selling their wares at anything less than a six percent margin.

Rating: +2

Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market? 

The 1939 Unfair Sales Act requires that all businesses mark up their wares by at least six percent before they are sold to the general public. When the law was passed toward the end of the Great Depression, it was believed, “The practice of selling certain items of merchandise below cost in order to attract patronage is a deceptive form of advertising and an unfair method of competition” (I.C.§ 48-402). The act goes on to state that “such practice misleads the consumer, works back against the farmer, obstructs commerce and diverts business from dealers who maintain a fair price policy, with the result of unemployment, underpayment of employees, excessive working hours, nonpayment of taxes and an inevitable train of undesirable consequences including economic depression” (I.C.§ 48-402).

If this act were fully enforced, it could stifle the growth of businesses. Pricing-to-grow is a common strategy utilized by businesses; they set their prices at or below cost in order to grow their customer base and total sales. Take for example a coffee shop that has just opened; it will likely offer major discounts as a form of advertising and capturing a new corner of the market.


Does it directly or indirectly create or increase penalties for victimless crimes or non-restorative penalties for non- violent crimes? Conversely, does it eliminate or decrease penalties for victimless crimes or non-restorative penalties for non-violent crimes? 

Businesses prosecuted under this act could face up to $500 for each violation, a conviction of a misdemeanor, and up to six months in jailall for engaging in a practice that benefits the poor and consumers.


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