Ark. Code Ann. » Title 4 Chapter 75
Arkansas Code Annotated

Ark. Code Ann. § 4-75-209 (2020)

Sale at less than cost or with intent to injure competitors

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    1. It shall be unlawful for any person, partnership, firm, corporation, joint-stock company, or other association engaged in business within this state to:
      1. Sell, offer for sale, or advertise for sale any article or product or service or output of a service trade at less than the cost thereof to the vendor; or
      2. Give, offer to give, or advertise the intent to give away any article or product or service or output of a service trade for the purpose of injuring competitors and destroying competition.
    2. Any person or entity so doing shall be guilty of a Class A misdemeanor.
    1. The term “cost” as applied to production is defined as including the cost of raw materials, labor, and all overhead expenses of the producer and as applied to the distribution, “cost” shall mean the invoice or replacement cost, whichever is lower, of the article or product to the distributor and vendor plus the cost of doing business by the distributor and vendor.
    2. The “cost of doing business” or “overhead expense” is defined as all costs of doing business incurred in the conduct of the business and must include without limitation the following items of expense: labor, which includes salaries of executives and officers, rent, interest on borrowed capital, depreciation, selling cost, maintenance of equipment, delivery cost, credit losses, all types of licenses, taxes, insurance, and advertising.
  3. In establishing the cost of a given article or product to the distributor and vendor, the invoice cost of the article or product purchased at a forced, bankrupt, closeout sale, or other sale outside of the ordinary channels of trade may not be used as a basis for justifying a price lower than one based upon the replacement cost as of the date of the sale of the article or product replaced through the ordinary channels of trade, unless:
    1. The article or product is kept separate from goods purchased in the ordinary channels of trade; and
    2. The article or product is advertised and sold as merchandise purchased at a forced, bankrupt, or closeout sale, or by means other than through the ordinary channels of trade, and the advertising states the conditions under which the goods were so purchased and the quantity of the merchandise to be sold or offered for sale.
  4. In any injunction proceeding or in the prosecution of any person as officer, director, or agent, it shall be sufficient to allege and prove the unlawful intent of the person, firm, or corporation for whom or which he or she acts.
  5. Where a particular trade or industry of which the person, firm, or corporation complained against is a member has an established cost survey for the locality and vicinity in which the offense is committed, the cost survey shall be deemed competent evidence to be used in proving the costs of the person, firm, or corporation complained against within the provisions of this subchapter.
  6. The provisions of this section shall not apply to any sale made:
    1. In closing out in good faith the owner's stock or any part thereof for the purpose of discontinuing his or her trade in the stock or commodity, and in the case of the sale of seasonal goods or to the bona fide sale of perishable goods, to prevent loss to the vendor by spoilage or depreciation, if notice is given to the public thereof;
    2. When the goods are damaged or deteriorated in quality, and notice is given to the public thereof;
    3. By an officer acting under the orders of any court; or
    4. In an endeavor made in good faith to meet the legal prices of a competitor as herein defined selling the same article or product or service or output of a service trade, in the same locality or trade area.
  7. Any person, firm, or corporation who performs work upon, renovates, alters, or improves any personal property belonging to another person, firm, or corporation shall be construed to be a vendor within the meaning of this subchapter.

History. Acts 1937, No. 253, §§ 3-6; Pope's Dig., §§ 14313-14316; A.S.A. 1947, §§ 70-303 — 70-306; Acts 2005, No. 1994, § 342.

Research References

Ark. L. Rev.

Wal-Mart Stores Inc. v. American Drugs, Inc: Drawing the Line Between Predatory and Competitive Pricing, 50 Ark. L. Rev. 103.

Case Notes

Construction.

This section is penal in nature and must be strictly construed in favor of those upon whom the burden of the penalty is sought to be imposed. Wal-Mart Stores, Inc. v. American Drugs, Inc., 319 Ark. 214, 891 S.W.2d 30 (1995).

The strategy of selling below the competitors' price, and even below seller's own cost, is markedly different from a sustained effort to destroy competition in one article by selling below cost over a prolonged period of time: subdivision (a)(1) of this section does not make loss leaders illegal, and plainly does not contemplate a prima facie case of predation based on loss-leader sales. Wal-Mart Stores, Inc. v. American Drugs, Inc., 319 Ark. 214, 891 S.W.2d 30 (1995).

Burden of Proof.

For a violation to occur under subdivision (a)(1) of this section, below-cost sales must be made for the purpose of destroying competition; mere proof of below-cost sales is not sufficient. Wal-Mart Stores, Inc. v. American Drugs, Inc., 319 Ark. 214, 891 S.W.2d 30 (1995).

Cited: McLane Co. v. Weiss, 332 Ark. 284, 965 S.W.2d 109 (1998).

Notes of Decisions
Cited in 3 cases, 1995–1998 · leading case: Wal-Mart Stores, Inc. v. Am. Drugs, Inc., 891 S.W.2d 30 (Ark. 1995).
Sort: Relevance Newest Treatment
Wal-Mart Stores, Inc. v. Am. Drugs, Inc., 891 S.W.2d 30 (Ark. 1995). · cites it 28× “The language of § 4-75-209 refers to "any article or product" and does not include consideration of the atmosphere of the store, the parking lot, air conditioning, and a whole group of services that surround the purchase of an item. We should reject Appellant's market basket…”
Ports Petroleum Co., Inc. of Ohio v. Tucker, 916 S.W.2d 749 (Ark. 1996). · cites it 4× “” Ark. Code Ann. § 4-75-209 (a)(1) (Repl. 1991).”
McLane Co. v. Weiss, 965 S.W.2d 109 (Ark. 1998). · cites it 3× “Wal-Mart Stores involved Ark. Code Ann. § 4-75-209 (a)(1) of the Unfair Practices Act which makes it unlawful for any corporation doing business in this state to sell at less than cost for the purpose of injuring competitors and destroying competition.”
Ark. Code Ann. § 4-75-209(a)(1): 2 cases
Wal-Mart Stores, Inc. v. Am. Drugs, Inc., 891 S.W.2d 30 (Ark. 1995). “The language of § 4-75-209 refers to "any article or product" and does not include consideration of the atmosphere of the store, the parking lot, air conditioning, and a whole group of services that surround the purchase of an item. We should reject Appellant's market basket…”
McLane Co. v. Weiss, 965 S.W.2d 109 (Ark. 1998). “Wal-Mart Stores involved Ark. Code Ann. § 4-75-209 (a)(1) of the Unfair Practices Act which makes it unlawful for any corporation doing business in this state to sell at less than cost for the purpose of injuring competitors and destroying competition.”
Ark. Code Ann. § 4-75-209(a)(l): 1 case
Wal-Mart Stores, Inc. v. Am. Drugs, Inc., 891 S.W.2d 30 (Ark. 1995). “The language of § 4-75-209 refers to "any article or product" and does not include consideration of the atmosphere of the store, the parking lot, air conditioning, and a whole group of services that surround the purchase of an item. We should reject Appellant's market basket…”
Ark. Code Ann. § 4-75-209(b)(2): 1 case
Wal-Mart Stores, Inc. v. Am. Drugs, Inc., 891 S.W.2d 30 (Ark. 1995). “The language of § 4-75-209 refers to "any article or product" and does not include consideration of the atmosphere of the store, the parking lot, air conditioning, and a whole group of services that surround the purchase of an item. We should reject Appellant's market basket…”
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