There is a sandwich shop where I work that has really good prices. A few months back, they raised the prices a bit. A soda that was 1.00 is now 1.15. A luch for under $5 is not really a thing there anymore.
Now I get inflation. They’ve had the same prices for nearly 10 years, and I understand that costs go up.
But in talking to one employee there, he said that they were forced to raise their prices by the city because other local eateries couldn’t compete.
Can a government do that? That pretty much goes directly against the free trade ideal.
FTR, other local eateries are doing fine. The sandwich shop on the other side of the building, which is very expensive, does more business.
In the US, you can be subject to predatory pricing actions if it is determined that you are setting prices below cost in order to drive competitors out of business or preventing new business from entering the market. But I think it would be pretty hard to take such action against a sandwich shop unless it was a large chain with significant market share.
And just to note: there isn’t really anything about the “free trade ideal” that is in the constitution of the US. The courts have ruled pretty broadly concerning Congress’s power under the commerce clause, so it’s not like you can invoke a “free trade” right spelled out in the constitution. That is, apart from some other freedom that is in there.
However, if you’re talking about a city in the United States… it sounds like BS to me. Perhaps there was some kind of tax increase or perhaps someone used “soft power” to lean on the owner (you know, saying "Increase your prices or we’ll enforce ordinance X to shut you down).
More likely, it’s just plain BS. People love to blame governments, especially when it’s something like having to raise prices.
On such a small scale, that’s total BS. As noted above, predatory pricing could be regulated, but that would only be on a very large scale and would make state or national news.
I will hedge my bets by saying there may be a wacky local bylaw that may call for such a thing, but I seriously doubt it.
Some states have a minimum markup law. But, at least in WI, it’s around 6% and a sandwich shop should be charging far, far more then a 6% markup on it’s sandwiches to begin with that they should have to raise them to come into compliance with that. Also, if they’re charging a dollar for cans of soda, again, they’re above and beyond a 6% markup. It’s really designed to protect small independent grocery stores and gas stations, not restaurants.
OTOH, if they’ve had the same prices for 10 years they likely haven’t been paying attention to the COGS and they may being selling things for less then cost which, if there is a minimum markup law, isn’t always legal.
No matter what the case, talking to an employee probably won’t get you the right answer anyways. I can’t tell you how many times I’ve told someone something and by the time it gets back to me it’s a completely distorted version of what I first said just due to how many iterations it’s been though. Or times where it’s just easier to explain something in far less (or different) detail because the employees really don’t need to know exactly why something happened. Or sometimes and employee overhears something, misinterprets it and starts telling it to other people.
There’s a store in Virginia near the VA-MD-WV conjunction that had a sign saying “Cigarettes at State Minimum”, seemingly implying that the prices were so low that if they were any lower, it would be illegal.
It could just be cost (or cost plus a minimum markup) plus the various taxes with no (or very little) profit for the store at all. It may very well be illegal for them to sell cigarettes at below cost. IOW it may very well be illegal for them to sell the cigarettes at a lower price.
Many people would be surprised at all the laws in place for commerce.
Hey, In Pennsylvania our Liquor Control Board doesn’t want us to drink at all!
My favorite beer place has been told to stop offering premiums and specials. The fucking PA LCB is doing every thing they can to negatively impact the beer drinker (that’s me).
I would think that if they weren’t paying taxes for over a decade, the city wouldn’t do anything to them, but the state and the feds would do a lot more than have them raise their prices.
FWIW, they don’t charge meal tax. I assume that it’s built into their prices.
IANAL, but I’d think that in order to apply predatory pricing laws, the authorities would need to have proof that the shop was operating at a loss. If they could somehow prove this, then that would probably mean that the shop was a front for the Mob or something, and the cops would shut their asses down, not make them jack up the prices.
Besides, the little mom-and-pop shops are normally the victims of predatory pricing (at the hands of big chains), not the perpetrators.
Joey P referenced the Wisconsin Minimum Markup laws. Most general items cannot be sold below cost but no minimum markup is specified. Alcohol and tobacco products are specifically designated a 3% minimum markup at wholesale and a 6% minimum markup at retail.
Not collecting sales tax seems like a pretty obvious miss that a business couldn’t get away with for any meaningful stretch of time. I do wonder, though, if the city jacked up property taxes or something like that.
