MANHATTAN (CN) – A liquor chain that challenged Connecticut’s liquor laws as out of step with the 21st century failed Wednesday to secure a reversal that would put its antitrust suit back on track.
Affirming the dismissal of the case by Total Wine & More, which has four locations in the Nutmeg State, the Second Circuit ruled that the minimum-bottle pricing and other restrictions by Connecticut on liquor sales compel “only vertical pricing arrangements among private actors.”
This means they are not pre-empted by federal law, U.S. Circuit Judge Paul Engelmayer wrote for a three-person panel.
U.S. District Judge Janet Hall dismissed Total Wine’s initial case back in 2017, refusing to consider the fairness of Connecticut’s liquor rules when it comes to consumers.
“Whether or not the statutory and regulatory scheme implemented by the state of Connecticut is wise is not a question for this court,” Hall had said in a footnote.
In support of its claim that the regulatory scheme promotes vertical price fixing, Total Wine attached data tables to its 2016 complaint to show “that, over long periods, … wholesalers often have charged the same amount for each alcoholic beverage product — e.g., Bombay Sapphire, Grey Goose, Jose Cuervo Gold — and have adjusted prices in lockstep.”
It argued the prices exceed what the competitive market would produce.
These allegations are quoted in Wednesday’s ruling: “Citing a study, Total Wine alleged that Connecticut’s regulatory scheme ‘result[s] in retail prices for wine and spirits in Connecticut that are as much as 24% higher than prices offered for identical products in the surrounding states.’”
Total Wine wanted to offer steeper discounts to its customers, but claimed that Connecticut’s liquor laws made this illegal.
Under Connecticut’s laws and regulations package stores can’t sell a bottle of alcohol for less than the “bottle price” set by wholesalers and posted each month. It’s a system that allows smaller stores to hold their prices close to the ones available at larger retailers.
Carroll Hughes, president of the Connecticut Package Store Association, has argued that eliminating the minimum-bottle price would cause at least 600 package stores and 10 manufacturers of specialty spirit products to lose their businesses.
Connecticut lawmakers like Rep. Michael D’Agostino, who co-chairs the General Law Committee, said Wednesday that he was disappointed in the decision and he hopes that Total Wine & More appeals the challenge to the U.S. Supreme Court.
He said Connecticut’s legislature will tackle rewriting its liquor laws next year. They were waiting for the court to issue a decision before deciding whether to debate the issue again.
A spokesman for Total Wine & More did not immediately returns calls and emails for comment.