§481-3  Sales at less than cost.  No
person, partnership, firm, corporation, joint stock company, or other
association engaged in business within the State shall sell, offer for sale, or
advertise for sale any article, or product, or service or output of a service
trade, at less than the cost thereof to such vendor, or give, offer to give, or
advertise with the intent to give away any article or product, or service or
output of a service trade, with the intent to destroy competition.



The term "cost" as applied to
production includes the cost of raw materials, labor, and all overhead expenses
of the producer; and as applied to distribution "cost" means and
includes the invoice cost of the merchandise to a distributor or the
replacement cost of the merchandise to a distributor, whichever is lower; less
all trade discounts except customary discounts for cash; to which shall be
added (1) freight charges not otherwise included in the invoice cost or the
replacement cost of the merchandise as herein set forth, and (2) cartage to the
distributor outlet if done or paid for by the distributor, and (3) a markup to
cover a proportionate part of the cost of doing business, which markup, in the
absence of proof of a lesser cost, shall be six per cent of the cost to the distributor
as herein set forth after adding thereto freight charges and cartage but before
adding thereto a markup; provided that in the case where a person, partnership,
corporation, or association is engaged in the business or makes sales both at
retail and wholesale, the "invoice cost" includes all elements
recognized by good accounting practice as proper elements of the cost; provided
further that taxes passed on to a purchaser as a separate item from the price
of merchandise shall be included in the advertised price or offer of sale of
the merchandise if such taxes are used to compute the markup of six per cent as
provided herein.



The "cost of doing business" or
"overhead expense" means all costs of doing business incurred in the
conduct of the business and includes without limitation the following items of
expense: labor (including salaries of executive officers), rent, interest on
borrowed capital, depreciation, selling cost, maintenance of equipment,
delivery costs, credit losses, all types of licenses, taxes, insurance, and
advertising. [L 1937, c 223, §3; RL 1945, §9323; am L 1955, c 241, §1(a); RL
1955, §205-4; am L 1961, c 95, §1; HRS §481-3]



 



Case Notes



 



  Purpose is to protect competitors as well as competition.  63
H. 289, 627 P.2d 260.