Court Opinion

ID: 9679418
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:52:23.941198+00
Date Added: 2024-06-11T18:17:13.446331
License: Public Domain

VANCE, Justice,
dissenting.
Respectfully, I dissent. The majority condemns K.R.S. 365.030 on the basis that it is not a “trade-practice regulation” but is in fact a “minimum mark-up” law.
This case was decided on a summary judgment and therefore all of the allegations of the complaint must be taken as true. The appellee alleged that appellants were selling their product below cost as defined by statute and further alleged that such sales below cost were for the purpose of destroying competition. Appellants have, in fact, conceded they were violating the statute for the purpose of injuring competitors.
I concede that the statute is unconstitutional if it is, in fact, a minimum mark-up statute. I am astounded that the majority can find anything about the statute which requires any mark-up whatever above cost. The majority opinion does not specify in any particular where a mark-up of any kind occurs by reason of the statute.
As I read the statute it would permit the appellants to sell their product at exactly cost. It does not require them to make profit to comply with the law. What it does require is that appellants do not sell their product at a price below their cost for the purpose of destroying competition by the appellee. This is exactly what the appellants admit they have been doing.
I believe the Court of Appeals was exactly right when it noted that “the monopolistic potential of price undercutting is, in the long run, more hostile to the public interest than is the value of temporarily low prices. The benefits to be gained from transiently low prices are so Lilliputian as to be grossly outweighed by the potential for an economic leviathan to destroy all competition and thus to consume the consuming public.”
The statute in question does not prohibit all sales below cost, but only those below cost sales which are made for the pupose of injuring competitors and destroying competition. Thus, sales in good faith in liquidating a business, sales where the goods have been damaged, sales made under a court order, or sales to meet in good faith the price of a competitor may be made below cost because such sales are not for the purpose of destroying competition.
In this country we have long recognized a legitimate state interest in regulating monopolistic practices. Thus, utilities, which are essentially monopolies, are regulated by the Public Service Commission to protect consumers. For competitive enterprises a statute such as K.R.S. 365.030 is an anti-monopoly statute, pure and simple, and it is well within the recognized police power of the state. It prevents a rich and powerful competitor from reducing its price below cost until it squeezes its competitor out of the market, after which, because it no longer has any competition, it can raise its prices as unreasonably high as it pleases.
This case was decided by summary judgment, and there is no evidence in the record, as yet, to show the extent that appellants were selling below their cost, but their admission that they were violat*84ing the statute with an intent to injure their competitors is, in itself, an admission of a cannibalistic practice designed to monopolize the market to some extent at least. Even though the procedure in this case has prevented the taking of evidence, as judges we are not required to blind ourselves to the history of monopoly in this country, and its dire consequences. The lessons learned from the robber barons of a past age are still there to see. The ability of a national dairy or bakery or oil company to sustain itself from the profits of a thousand subsidiaries across the country, while deliberately absorbing a substantial loss from below cash sales in one locality for the purpose of eliminating a local competitor in that locality is plain to see. The purpose of statutes prohibiting below cost sales is to prevent such monopolistic practices. The statute in question does not require or guarantee a mark-up, it simply prohibits sales below cost for the purpose of eliminating competition.
The majority places great reliance upon the similarity of the statute in question here to the statute which was held unconstitutional in Kentucky Milk Marketing v. Kroger Co., Ky., 691 S.W.2d 893 (1985). In that case, however, there was a trial on the merits and evidence which showed that the statute as applied by the milk marketing commission resulted in a mark-up or profit. There is no marketing commission to regulate the enforcement of the statute in question, and there is no evidence in the record which shows that any mark-up results from compliance with the statute.
I would reverse the summary judgment and remand to the trial court for further proceedings.
GANT and LAMBERT, JJ., join in this dissenting opinion.