Total Wine Sues Connecticut Over Minimum PricingAugust 24, 2016
Asserting “price-fixing by wholesalers and retailers,” Total Wine & More is challenging Connecticut’s mandatory minimum pricing rules on wine and spirits on the grounds that the state’s regulations constitute “a restraint of trade and a violation of the federal Sherman anti-trust act.”
Total Wine, which entered Connecticut in 2012 and now has four stores in the state, has aligned with Connecticut Governor Dannel Malloy in recent years on a push to liberalize the state’s alcohol laws. Working through the state budget process, that alliance has won Sundaysales, extended hours for liquor stores, 64-ounce growler sales and an increase in the number of liquor licenses from one per person to five, among other reforms. But their bid to end minimum pricing through the legislature has so far been unsuccessful.
Noting that Connecticut is the only state in the country where wholesalers and retailers set minimum retail prices for wine and spirits, Total Wine said that the arrangement results in prices that are sometimes 25% higher than those found in neighboring states, and has sent consumers across the border—notably to Massachusetts and New Hampshire—in search of less expensive bottles.
Specifically, Total Wine’s suit alleges that “wholesalers set bottle and case prices and share that information with each other through the state-mandated posting system, and then consistently coordinate their prices to match their competitors’ posted prices, resulting in horizontal price-fixing.” Through this process, as well as the state’s prohibition of volume discounts on purchases from wholesalers by retailers, Total Wine says it “cannot use its market and business efficiencies to reduce the prices offered to consumers.”
Smaller retailers in the state counter that if wine and spirits products are allowed to be offered below-cost at retail, those operating on thinner margins would be forced out of business. Speaking to the Hartford Courant, a lobbyist for the state’s package stores, Carroll Hughes, said the change would result in “the loss of substantial state revenue through sales taxes and fees,” and mean “the loss to municipalities of up to 600 stores and 5,000 employees,” including retail and wholesale job losses, as traditional package stores are forced out of the market. —Daniel MarstellerSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.