Legislature(2001 - 2002)
04/26/2002 03:25 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 512-UNFAIR CIGARETTE SALES CHAIR MURKOWSKI announced that the final order of business would be HOUSE BILL NO. 512, "An Act relating to cigarette sales; and providing for an effective date." Number 1206 REPRESENTATIVE ROKEBERG moved to adopt CSHB 512, Version 22- LS1646\F, Ford, 4/26/02, as the working document. There being no objection, Version F was before the committee. DALE ANDERSON, Legislative Assistant to the House Finance Committee, Alaska State Legislature, testified on behalf of the sponsor of HB 512, the House Finance Committee. Mr. Anderson provided the following testimony: This CS came as a collaborative effort between industry and the Department of Revenue and ... our drafters. House Bill 512 was introduced to start a discussion on the effects on business practices that, to some, have been looked upon as unfair and predatory. House Bill 512 encourages fair and honest competition and safeguards the public against unfair, dishonest, and fraudulent business practices existing in transactions involving the sale of cigarettes in the wholesale and retail trades in the state. The bill creates a general trade practice regulation prohibiting sales below cost. The law considers the practice of selling below cost to attract patronage in the form of deceptive advertising, which diverts businesses from dealers who maintain a fair pricing policy [and] ultimately [results] in lessened competition and market disruption. The basic purpose of [HB] 512 is to prevent predatory pricing and ensure that fair competition among both the retail and wholesale distributors of cigarettes in the state. It is difficult for us to sort out the intricacies of the tobacco business so we've asked several people that are on-line now to help us with the discussion. Number 1309 CHAIR MURKOWSKI inquired as to what has brought about HB 512. Does Alaska have a problem with predatory pricing and cigarettes being used as a loss leader, she asked. MR. ANDERSON said that is what has been told. The CS clarifies the intent of the statute. Furthermore, Section 1 [of Version F] broadens the language to refer to all sales [of cigarettes] by licensed sellers in the state. [The CS] also addresses enforcement issues that were of concern to the department. Mr. Anderson pointed out that [Version F] changes the percentage of sales from two percent to four percent. One of the large issues that is addressed by the fiscal note is the cost survey issues. With the changes encompassed in Version F, Mr. Anderson said he believes there will be significant changes in the fiscal note. MR. ANDERSON, in response to Chair Murkowski, specified that Title 43 deals with business practices. REPRESENTATIVE MEYER recalled that at one point retailers were paid to place [cigarettes] on prime shelf space. Representative Meyer asked if that is still the case and what this legislation attempts to balance. MR. ANDERSON said he didn't know the answer and would defer to those on-line. CHAIR MURKOWSKI announced that HB 512 would be held over.
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