Ark. Code Ann. § 4-75-708 (2020)
Sales at less than cost, rebates, concessions, etc. — Penalty
- It shall be unlawful for any wholesaler, retailer, or salesperson with intent to injure competitors or destroy or substantially lessen competition to advertise, offer to sell, or sell, at retail or wholesale, cigarettes at less than cost to the wholesaler or retailer, as the case may be.
- It shall be unlawful for any wholesaler, retailer, or salesperson to offer a rebate in price, to give a rebate in price, to offer a concession of any kind, or to give a concession of any kind or nature whatsoever in connection with the sale of cigarettes with intent to injure competitors or destroy or substantially lessen competition.
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It shall be unlawful for any retail dealer to induce or attempt to induce or to procure or attempt to procure:
- The purchase of cigarettes at a price less than cost to the wholesaler; or
- Any rebate or concession of any kind in connection with the purchase of cigarettes.
- Any wholesaler, retailer, or salesperson who violates this section shall be guilty of a violation and upon conviction shall be subject to a fine of not more than five hundred dollars ($500).
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The following shall be prima facie evidence of intent to injure competitors and destroy or substantially limit competition:
- The advertisement, offer for sale, or sale of cigarettes by any wholesaler, retailer, or salesperson at less than cost to him or her;
- Any offer of a rebate in price or the giving of a rebate in price or an offer of a concession or the giving of a concession of any kind in connection with the sale of cigarettes; or
- Inducing or attempting to induce or procuring or attempting to procure the purchase of cigarettes at a price less than cost to the wholesaler or the retailer.
History. Acts 1951, No. 101, § 3; A.S.A. 1947, § 70-603; Acts 2003, No. 373, § 1; 2005, No. 1994, § 40.
Research References
U. Ark. Little Rock L. Rev.
Survey of Legislation, 2003 Arkansas General Assembly, Business Law, 26 U. Ark. Little Rock L. Rev. 351.
Case Notes
Constitutionality.
Terms “trade discount” and “rebate” were unclear under existing Unfair Cigarette Sales Act, § 4-75-701 et seq., and the tobacco control board's regulations as to what was an allowed “trade discount” as opposed to a prohibited “rebate” were unclear; thus, the law was unconstitutionally vague under due process standards because it did not give a person of ordinary intelligence fair notice of what was prohibited, specifically, whether payments to the retailer were permitted “trade discounts” or prohibited “rebates.” Ark. Tobacco Control Bd. v. Sitton, 357 Ark. 357, 166 S.W.3d 550 (2004).
Because rebates make it more difficult to enforce and administer the Arkansas Unfair Cigarette Sales Act, § 4-75-701 et seq., the legislature may have decided to prohibit them; thus, the anti-rebate provisions found in subsection (e) of this section do not violate the due process protections of the Arkansas or U.S. Constitutions. McLane S., Inc. v. Davis, 366 Ark. 164, 233 S.W.3d 674 (2006).
Administrative Remedies.
Where the Arkansas Tobacco Control Board charged company with violating the anti-rebating provisions of the Arkansas Unfair Cigarette Sales Act, subsection (b) of this section, the company was required to exhaust its administrative remedies before seeking declaratory relief in the form of preliminary and permanent injunctions in the circuit court; moreover, company's constitutional argument could be raised and developed at the administrative level. McLane S., Inc. v. Davis, 80 Ark. App. 30, 90 S.W.3d 16 (2002).
Anti-Rebating.
Arkansas Tobacco Control Board's consideration of cooperative organizations as buying pools exempt from the anti-rebating provision, this section of the Unfair Cigarette Sales Act, § 4-75-701 et seq., was clearly wrong because a cooperative was considered a retailer under § 4-75-702(8) and, as such, was prohibited from providing rebates. McLane Southern, Inc. v. Ark. Tobacco Control Bd., 2010 Ark. 498, 375 S.W.3d 628 (2010).
Construction With Other Law.
Section 26-57-256(a)(5)(A) clearly permits the Arkansas Tobacco Control Board to conduct hearings regarding any permit or license in violation of the Unfair Cigarette Sales Act. H.T. Hackney Co. v. Davis, 353 Ark. 797, 120 S.W.3d 79 (2003).
Costs.
Finding against a cigarette wholesaler with regard to the cost of doing business was improper in part where the Arkansas Tobacco Control Board's regulation did not fall within the Unfair Cigarette Sales Act's provision, thus, the four percent cost of doing business was improper; however, the two percent presumptive cost of doing business would then govern, thereby triggering the other valid remaining provisions of the regulation. McLane Co. v. Davis, 353 Ark. 539, 110 S.W.3d 251 (2003).
Patronage Dividends.
Because patronage dividends paid to retailers by cooperatives constituted illegal rebates under subsection (b) of this section, any attempt by a wholesaler to match that price could in no way be made in good faith where the plain language of § 4-75-704(a)(1) allowed a wholesaler to sell at a price made in good faith to meet the price of a competitor. McLane Southern, Inc. v. Ark. Tobacco Control Bd., 2010 Ark. 498, 375 S.W.3d 628 (2010).
Cited: McLane Co. v. Weiss, 332 Ark. 284, 965 S.W.2d 109 (1998).