SECTION 14. Purchase, sale or distribution of milk below price fixed or below cost; rebates

(a) No milk dealer shall distribute or sell in any market within the commonwealth milk obtained from a producer or from another milk dealer if such milk was acquired from the producer within the commonwealth at a cost less than the price fixed by the commissioner to be paid for milk so acquired and distributed.

(b) Any sale within the commonwealth, by any milk dealer licensed or required to be licensed under this chapter, of any milk produced within the commonwealth or received from any other source at a price less than the minimum price fixed by the commissioner for such milk shall be a violation of this chapter.

(c) After the commissioner shall have fixed the price to be charged or paid for milk, whether by form, class, grade or use, no milk dealer shall purchase, receive, sell or distribute or offer to purchase, receive, sell or distribute milk at any price less than such price as shall have been made applicable to the particular transaction; and no method or device shall be lawful whereby milk is purchased, received, sold or distributed, or offered to be purchased, received, sold or distributed, at a price less than such price whether by discount, rebate, free service, advertising allowance, or by a combined price for such milk together with another commodity or service, as a result of which the total price for the milk and such other commodity or service is less than the aggregate of the prices for the same when sold or offered for sale or performed separately, or otherwise.

(d) No person shall sell within the commonwealth any milk, or render any service in connection with the sale or distribution of milk, at a price less than the cost of such milk or service, including, in the case of milk sold, the original purchase price thereof, and in every instance all regular direct or indirect elements of cost as defined in section one; and no milk dealer shall evade this prohibition by the use of any method or device, whether by discount or rebate, by barter, by exchange, by free service, by distribution of free milk, by advertising allowance, by loan of equipment at less than the proper allocation of depreciation, by rental of equipment at less than fair rental value or sale of equipment at less than fair market value, nor by a combined price for such milk together with another commodity or service, as a result of which the total price for the milk and other commodity or service, is less than the aggregate of the prices for the same when sold or offered for sale or performed separately, or otherwise. In the case of any person effecting sales of milk which has not been purchased, there shall be included as a part of the cost of such milk, when sold or offered for sale, an amount equal to the purchase price which would have been payable under state or federal milk marketing order if such person had purchased such milk within the commonwealth. The provisions of this subsection and subsection (e) shall not prohibit the use of coupons, trading stamps or donations of milk exclusively for charitable purposes to any duly organized charitable corporation.

The profit derived from the sale of one product, whether the same be one of those included in the term milk or some other product, shall not be utilized in cost computations as a credit to or deduction from the cost allocable to any product embraced by the term milk so as to subsidize or lower the cost of doing business with respect to such milk.

With respect to a store in its capacity as a milk dealer, cost shall include the price paid by the store for milk plus that portion of the store's overhead or cost of doing business properly allocable to milk, which cost of doing business shall include, but shall not be limited to, applicable items as enumerated in the definition of cost contained in section one.

(e) In connection with the sale of milk or cream (1) No milk dealer shall discriminate in price, either directly or indirectly, between different purchasers of milk of like grade, quality and quantity where the effect of such discrimination may be to lessen competition or tend to create a monopoly, or to injure, destroy, or prevent competition of any milk dealer; provided, that nothing in this paragraph shall prevent differentials which make only due allowance for difference in the cost of delivery resulting from differing methods or quantities in which such milk is delivered to such purchasers; except that nothing in this paragraph shall prevent persons engaged in selling milk from selecting their own customers in bona fide transactions and not in restraint of trade.

(2) No milk dealer shall discriminate in prices in the sale of any milk between or within any of the cities or towns of the commonwealth with the intent or with the effect of unfairly diverting trade from a competitor or otherwise injuring a competitor or of destroying or lessening competition; provided, that no violation will result from different prices which reflect the actual transportation cost from the point of processing or purchase to the point of resale; and provided further, that prices made in good faith to meet competition in such city or town shall not be in violation of this paragraph. Proof of advertising, offering for sale, or selling any such milk in any one of such cities or towns at prices less than advertised, offered for sale or sold in any other such city or town by such person which cannot be accounted for as necessary to meet competition shall be prima facie evidence of violation of the provisions of this paragraph.

(3) No milk dealer shall discriminate between purchasers or between or within localities, as set forth in paragraphs (1) and (2) of this subsection by any scheme of rebates, refunds, commissions or discounts whether in the form of money or otherwise, or in the form of extending to certain purchasers special services or privileges not extended to all other purchasers in the same category.

(4) No milk dealer shall make or renew any money loan to a store.

(5) No milk dealer shall extend credit to any store in excess of thirty days payable fifteen days thereafter.

Whoever violates any provision of this subsection or subsection (f) shall be punished by a fine of not less than fifty nor more than two hundred dollars.

It shall be a defense under any of the provisions of this subsection if prices are charged or other action taken for the purpose of meeting competition in good faith. It shall be a defense under any of the provisions of paragraphs (1), (2) or (3), if the price differentials involved make only due allowance for differences in the cost of manufacture, sale, or delivery, resulting from the differing methods or quantities in which such commodities are sold or delivered. The burden of proof with respect to the above two defenses shall be on the milk dealer.

The provisions of this subsection shall not apply to sales to federal, state or municipal governmental bodies or agencies, or to schools, colleges, universities, libraries, churches, hospitals and charitable institutions, not operated for profit.

(f) Notwithstanding the provisions of this section to the contrary, the department is hereby authorized and directed to establish a program to allow for the use of discount coupons in promotional and marketing campaigns of milk and cream for consumer use and benefit. The commissioner shall promulgate regulations necessary to carry out the provisions of this subsection. Said regulations shall be promulgated no later than 180 days from the effective date of this act and shall include, but not be limited to, reasonable and appropriate mechanisms to protect diary farms that directly market their own fluid milk or cream to the consumer and civil penalties for violation of said regulations, including possible license suspension. The use of coupons in promotional or marketing campaigns shall be subject to the approval of the commissioner and shall not be predatory towards any Massachusetts dairy farmer who directly markets and sells their own fluid milk to the consumer. The use of coupons shall not result in the sale of milk at a price that is below the cost of production.

The commissioner is directed to annually study, analyze and assess the economic impact of this program on dairy farmers, producers, processors, consumers and the commonwealth's milk markets. The report shall be submitted to the joint committee on environment, natural resources and agriculture, the secretary of energy and environmental affairs and the secretary of housing and economic development on or before October 1, 2010 and annually for the proceeding 4 years.