Legislation that was initially labeled an attack on the advertising techniques of Smith's Food & Drug won't keep Smith's from comparing its prices with competitors and touting itself as the "Certified Low Price Leader."
"It won't change a thing," Smith's executive vice president Tom Welch said following a committee hearing Wednesday where HB163 was passed favorably to the floor of the House.After earning the reputation as one of the most controversial bills in the 1989 legislative session, the "Utah Truth in Advertising Act," sponsored by Rep. Mike Dmitrich, D-Price, is now expected to sail easily through the House and Senate.
Lawmakers and observers said the legislation, which employed some of the state's most influential lobbyists, was primarily a battle between American Stores Co. and Smith's, which operate two of the state's largest supermarket chains.
That theory surfaced after the initial bill placed severe restrictions on using audited assessments of prices among competitors, which Smith's does regularly. Welch initially attacked the bill as being solely targeted at Smith's, and the company retaliated by filing its own "Uniform Deceptive Trade Practices Act."
But after weeks of negotiation, a compromise was finally reached Wednesday afternoon shortly before the scheduled committee hearing, merging the two bills.
Welch agreed to table its bill, saying the substitute HB163 now applies to all retailers and all forms of advertising.
In addition to placing time and disclosure requirements on price comparison audits, the act says advertising is deceptive if a retailer compares its price with an inaccurate price of a competitor; compares its discounted price to a competitor's regular price without disclosing the difference; compares prices of products made of different materials without disclosing that fact; compares an inflated regular price with a discount price; or fails to disclose that the sale price is not good for at least seven days.
The bill's author, American Stores attorney Sue Vogel, told the committee that a retailer violating the act can be sued by a competitor, provided the offending retailer is given 10 days notice to stop the illegal advertising.
A competitor can sue for an injunction, attorney's fees and damages, but Vogel said that since damages would be difficult to prove, the anticipated remedy would be a court order stopping the advertising.
Although a truce was struck between the bill's two main parties, the Utah Advertising Federation remains opposed.
Federation spokesman Dale Zabriskie said a disagreement between two retail chains shouldn't be imposed on all other businesses. "We don't feel it (the bill) is responding to any hue and cry by consumers against this type of advertising."
Consumer advocates have been skeptical about the benefits of legislation resulting from a fight between two retail giants.
The characterization of the bill as a battle between two grocers without consumer interests at heart has angered American Stores, one of the largest retail grocers in the country and owner of Alpha Beta supermarkets.
Company spokesman Michael Miller said Alpha Beta operates as any other "small business entity" in Utah and the bill is a good faith effort on behalf of consumers and not a competitive move against Smith's.
Dmitrich told the committee that retailers other than American Stores have given their support to the bill.
Responding to critics saying laws already exist to sue deceptive advertisers, Vogel said that the state lacks resources to enforce the laws, while retailers can afford to prosecute competitors on behalf of their customers and consumers.