Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, August 24, 1993 TAG: 9308240060
SECTION: BUSINESS PAGE: B5 EDITION: METRO
SOURCE: Associated Press
DATELINE: CONWAY, ARK. LENGTH: Medium
But Goode, owner of American Drugs Inc. of Conway, wasn't gloating Monday about the bargains he got; he was testifying in a lawsuit that he and two other pharmacy owners have brought against Wal-Mart Stores Inc.
The merchants, seeking $1.1 million in damages, charge that the world's largest retailer prices merchandise below cost in an effort to drive smaller competitors out of business.
Wal-Mart's prices "have had a negative effect on our store, a very negative effect. I lost customers," Goode said in the first day of the trial in Faulkner County Chancery Court.
The three independent drugstores, all in Faulkner County, charge that Wal-Mart, based in Bentonville, Ark., is violating the Arkansas Unfair Practices Act, which says no one may sell or advertise any article below cost "for the purpose of injuring competitors and destroying competition."
The discount retailer has admitted in court filings that it does sell some products for less than they cost, but contends it is not breaking the law because it is not trying to injure its competitors.
If the three drugstore owners are successful in their suit, Wal-Mart could be open to charges by other competitors.
The Arkansas suit is not the first time Wal-Mart has been taken to court over its pricing policies. The retailer lost a similar case in 1986 in Oklahoma and was forced to raise its prices in that state.
Wal-Mart, popular with consumers because of its prices, has been blamed for the demise of some long-established merchants in small towns across America. Recently, its plans to move into the Northeast met protests from retailers who feared they would be unable to compete and be forced out of business.
With $55.5 billion in 1992 sales and more than 2,300 discount stores and warehouse club outlets, Wal-Mart's volume lets it command lower prices from its suppliers. The savings are passed along to customers.
Wal-Mart attorney Peter Kumpe said in his opening statement Monday that competition among pharmacies in Faulkner County is thriving. The plaintiffs are doing well and the only problems they have had in the drug market is from normal, healthy competition, he said.
Kumpe also said Wal-Mart's pricing policies are set by its headquarters and are the same throughout the company for a wide spectrum of products, which he called "the market basket."
"There is no evidence that the market basket is sold below cost," Kumpe said.
Goode, Tim Benton of Mayflower Family Pharmacy and Jim Hendrickson of Baker Drug Store of Conway filed the suit in 1991.
Matthew Adlong, their lawyer, said in his opening statement that Wal-Mart systematically priced its drugs below cost with the intent of driving the competition out of business.
He said Wal-Mart's policy has only one rationale: "That is to sell below cost to injure competitors and damage competition."
The plaintiffs are seeking $100,000 in actual damages, $1 million in punitive damages, attorney fees and costs.
The suit is the latest in a string of actions critical of Wal-Mart. The company also has been named in a class-action lawsuit in Texas, claiming Wal-Mart and Toys 'R' Us Inc. sold used merchandise as new.
In New York, the attorney general has challenged Wal-Mart's restrictions on employee dating as a violation of antidiscrimination laws.
Memo: ***CORRECTION***