Introduced by Representative Miller of Elmore
Subject: Commerce and trade; tobacco products; minimum wholesale and retail prices
Statement of purpose: This bill proposes to set minimum wholesale and retail prices for tobacco products sold in Vermont and proposes to pay for enforcement through a license and fee for dealers and distributors.
AN ACT RELATING TO TOBACCO SALES TRADE PRACTICES
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 32 V.S.A. chapter 205, subchapter 5 is added to read:
Subchapter 5. Tobacco Trade Practices
§ 7851. DEFINITIONS
For the purposes of this subchapter:
(1) “Basic cost of cigarettes” means the manufacturer’s list price of cigarettes plus the full value of any stamps that may be required for state cigarette tax purposes, unless that amount is included in the invoice cost.
(2) “Market cost” means the basic cost of cigarettes, plus the transaction cost. Any fraction of a cent of one-tenth of one cent or more per carton of ten packages of cigarettes shall be rounded off to the next higher cent.
(3) “Transaction cost” means:
(A) Five per centum (five percent) of the base cost to the retail dealer.
(B) Five per centum (five percent) of the cost of cigarettes to the wholesale dealer.
(C) Twenty per centum (20 percent) of the base cost of a carton of cigarettes to a retail consumer.
(D) Thirty per centum (30 percent) of the base cost of a single package of cigarettes to a retail consumer.
§ 7852. SALE BELOW MARKET COST PROHIBITED
(a) It shall be unlawful for any retailer, wholesaler, or other person to do any of the following:
(1) Advertise, offer for sale, or sell to any person in this state, at retail or wholesale, cigarettes at less than the market cost.
(2) Offer or give a price rebate or offer or give a concession of any kind in connection with the sale of cigarettes.
(b) It shall be unlawful for any retailer to do either of the following:
(1) Induce or attempt to induce or procure or attempt to procure cigarettes at a price less than the base cost.
(2) Provide or offer any rebate or concession of any kind in connection with the purchase of cigarettes.
(c) Evidence of a violation of this section shall be prima facie evidence of an intent to damage or reduce competition in the sale of cigarettes.
§ 7853. COMBINATION SALES
In all advertisements, offers for sale, or sales to any person in this state that involve two or more items, at least one of which is cigarettes, at a combined price, and in all advertisements, offers for sale, or sales to any person in this state that involve offering or giving a concession of any kind, whether it be coupons or otherwise, the retail or wholesale dealer’s selling price shall not be below the sum of the base cost plus the transaction cost.
§ 7854. SALES EXCEPTIONS
(a) The provisions of this subchapter shall not apply to any of the following sales:
(1) Isolated transactions not in the usual course of business.
(2) Discontinuing trade in cigarettes.
(3) Sale of damaged or imperfect cigarettes.
(4) Final liquidation of a business, including liquidation by a fiduciary or other officer acting under the order or direction of any court.
(b) Any cigarette advertisement, offer for sale, or price based on the exceptions in subsection (a) of this section shall clearly state within the advertisement, offer for sale, or price the reason for the pricing exception and the quantity of the cigarettes advertised, offered for sale, or sold.
§ 7855. MATCHING COMPETITOR’S PRICE
(a) Any retailer may advertise, offer to sell, or sell cigarettes at a price made in good faith to meet the lawful retail price of a competitor who is selling the same article in this state.
(b) Any wholesaler may advertise, offer to sell, or sell cigarettes at a price made in good faith to meet the lawful wholesale price of a competitor who is selling the same article in this state.
(c) The price of cigarettes advertised, offered for sale, or sold under the exceptions listed in section 7854 of this title shall not be considered the price of a competitor, and shall not be used as a basis for establishing prices below cost.
(d) Bankruptcy sale prices shall not be considered as a valid price of a competitor within the purview of this section.
§ 7856. SALES CONTRACTS VOID
Any contract, expressed or implied, made by any person in violation of any of the provisions of this subchapter is declared void.
§ 7857. ADMISSIBLE EVIDENCE
(a) In determining “business cost” and “market cost,” the department or any court of appropriate jurisdiction may consider any evidence tending to show that the dealer subjected to judicial scrutiny violated the terms of this subchapter, including evidence of the customary business practices of similar trade establishments.
(b) Merchandise or payment made by a manufacturer to a retailer or wholesaler for display, advertising, or promotional purposes shall not be considered in determining the “basic cost of cigarettes.”
§ 7858. SALES OUTSIDE ORDINARY CHANNELS
The invoice cost of cigarettes purchased under the terms of section 7854 of this title shall not be considered a basic cost of cigarettes. The basic cost of cigarettes purchased under the terms of section 7854 shall be the replacement price through ordinary channels of trade.
§ 7859. GENERAL POWER
The department may adopt rules and regulations for the enforcement of this subchapter.
§ 7860. REMEDIES
An action may be maintained in superior court to enjoin a violation or threatened violation of any of the provisions of this subchapter. An action under this section may be brought by any person injured by any violation of this subchapter or by the attorney general upon the request of the department. If the plaintiff prevails, the plaintiff shall be entitled to damages, injunctive relief, costs, and reasonable attorney fees.
§ 7861. PENALTIES
(a) The license of any dealer or distributor issued pursuant to subchapter 2 of this chapter may be suspended or revoked for failure to comply with any provision of this subchapter, after notice and an opportunity for hearing.
(1) The license of a dealer or distributor may be suspended for no fewer than five days nor more than 30 days for a first offense.
(2) The license of a dealer or distributor shall be revoked for a second offense.
(b) A revocation hearing under this section shall be conducted pursuant to section 7781 of this title.
Sec. 2. 32 V.S.A. § 7735 is amended to read:
§ 7735. TERM OF LICENSES; LICENSING FEE
Each license issued under the
provisions of this subchapter shall be valid as long as the licensee continues
to do business at the place named unless revoked or suspended by the
commissioner as provided in section 7736 of this title. If the business with
respect to which such license was issued shall be sold or transferred or if the
licensee ceases to do business at the place named, the license shall
immediately be returned to the commissioner for cancellation. Each
license issued under this subchapter shall be valid for one calendar year
unless revoked or suspended by the commissioner. The fee for the license shall
be $3,000.00 per year. The license is nontransferable.
Sec. 3. EFFECTIVE DATE
This act shall take effect on January 1 following passage.
The Vermont General Assembly
115 State Street