BILL NUMBER: S8563
SPONSOR: CLEARE
 
TITLE OF BILL:
An act to amend the general business law, in relation to enacting the
"consumer grocery pricing fairness act"
 
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to stop price discrimination against inde-
pendent retailers that prevents them from offering lower prices to their
customers, while preserving efficiencies from economies of scale.
 
SUMMARY OF SPECIFIC PROVISIONS:
§ 3 amends the general business law by adding article 22-C Article
22-C, Section 350-j defines key terms to be used within this article.
Article 22-C, Section 350-k, adds the following subsections: Subsection
i makes it unlawful for covered suppliers to deny equal terms of sale to
covered retailers or covered wholesalers purchasing the same covered
good in the same volume at roughly the same time.
Subsection 2 requires covered suppliers, upon request, to provide
covered retailers and covered wholesalers with anonymized terms of sale
offered to dominant covered retailers for the same covered good and
volume within the prior i8o days.
Subsection 3 prohibits covered suppliers from refusing to sell covered
goods to covered retailers or covered wholesalers based on trade channel
distinctions if doing so creates unequal terms of sale.
Subsection 4 bars covered suppliers from refusing to sell covered goods
to non-dominant covered retailers or covered wholesalers who have paid
on time in the past year, requested equal terms, and lack any commer-
cially reasonable basis for denial.
Subsection 5 prohibits dominant covered retailers from demanding terms
of sale that allow them to over-purchase covered goods beyond their
regular sales capacity in a way that unreasonably limits availability to
other covered retailers.
Subsection 6 bars dominant covered retailers from coercing or inducing
covered suppliers to violate this section.
Section 350-1 makes covered suppliers and dominant covered retailers
liable for violations committed by their agents.
Section 350-m states that liability does not attach to a person
alleged to have engaged in unlawful conduct described in
Section 350-k of this article if differences in terms of sale stem
from genuine efficiencies (such as self-distribution or manufacturing
economies), if a covered retailer voluntarily accepted different terms
in exchange for commercially reasonable consideration without coercion,
or if the terms applied only to situations involving perishable or
seasonal covered goods, distress sales, or discontinuation of business.
Section 350-n grants immunity to covered suppliers when dominant
buyers imposed anticompetitive preferential terms on suppliers. To
receive immunity, a covered supplier must demonstrate (1) that it did
not collude with the dominant covered buyer, (2) the covered supplier
would have suffered substantial harm had it refused the buyer; and
(3) the covered supplier made a good-faith effort to disclose the
coercion to enforcers.
Section 350-o authorizes enforcement by the Attorney General or
injured parties, who may seek injunctions and civil penalties up to
three times the actual damages.
Section 350-p clarifies that the article does not override existing
antitrust laws and does not require parties to do business with one
another unless a refusal would itself violate the article.
§ 4 establishes that this action shall take effect immediately
 
JUSTIFICATION:
Independent grocers are the backbone of New York's food economy, partic-
ularly in New York City and the State's rural and low-income communi-
ties. But, because of the anticompetitive practices of big box retailers
and national grocery chains who extract lower prices from suppliers,
these small businesses, and their wholesaler distributors and suppliers,
are not able to compete on a level playing field, resulting in rising
food prices for consumers across New York. As a result, many of New
York's small and independent food retailers are struggling to survive,
food deserts are increasingly widespread among New York communities, and
the price of food has skyrocketed, crushing consumers.
This bill will prohibit suppliers from engaging in unfair price discrim-
ination against independent retailers. This bill requires that suppliers
offer deals on price, packaging, delivery terms, marketing, and other
terms to independents that are equivalent to the deals they give to big
box retailers. This requirement protects scale efficiencies from truck-
load-volume purchases while prohibiting discriminatory terms that are
often demanded by dominant buyers and unrelated to any genuine efficien-
cies. This bill also imposes liability for dominant buyers who coerce
suppliers into offering them preferential terms and prices not justified
by efficiency. Through an economic principle called the "waterbed
effect," suppliers make up lost profits from discounted sales to domi-
nant buyers by charging higher prices to smaller buyers-higher prices
those smaller buyers have no choice but to pass along to consumers.
Dominant buyers also often impose one-time, in-full, delivery require-
ments on suppliers that result in wasted product at big box stores and
shortages at smaller retailers. This bill would hold those buyers
responsible when these preferential terms are not justified by produc-
tive efficiencies. Unfair terms imposed by dominant buyers harm competi-
tion by driving out smaller rivals, and stopping this conduct will
preserve retail choice while protecting the competition that improves
quality and lowers prices. Passage of this bill is essential to address-
ing the affordability crisis and rising consumer costs and protecting
New York's small businesses by ensuring fair pricing based on transpar-
ency and competition, not the monopolistic practices of dominant corpo-
rations.
 
PRIOR LEGISLATIVE HISTORY:
None.
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect immediately.