Retailer on a Mission to Slash CT Booze Prices

     NEW HAVEN, Conn. (CN) — After three years of failed legislative efforts to change how Connecticut prices alcohol, a national liquor retailer is taking the fight to federal court.
     Total Wine & More, a national retailer with four stores in Connecticut, filed suit Tuesday, alleging that the Department of Consumer Protection’s 35-year-old practice of regulating liquor prices constitutes a price-fixing scheme.
     Consumers are the ones who suffer as a result of Connecticut’s pricing practices, Total Wine & More spokesman Edward Cooper said in an interview.
     Out of 150 retail stores that Total Wine & More will operate in 21 states by the end of the year, Connecticut “is the only one in the union that does business like this,” Cooper said.
     The same day as the company filed its complaint, it took out full-page ads in newspapers offering 30 different wines and spirits at below the minimum-bottle price, in violation of Connecticut law.
     For example, the mandated price of a bottle of Grey Goose is $56.99, but Total Wine & More is selling the vodka for $50.99, according to its ad. Total Wine & More is also selling a Laurent Perrier Brut champagne for $29.39 when the mandated price is $39.99.
     Violations of Connecticut laws or regulations carry up to $1,000 in fines, up to one year of imprisonment, or both. The Department of Consumer Protection also has the authority to suspend and revoke a retailer’s permit for violating the Liquor Control Act.
     The Department of Consumer Protection said it is investigating, but otherwise declined to comment on the lawsuit.
     The Connecticut Package Store Association has opposed efforts by Democratic Gov. Dannel P. Malloy to eliminate minimum-bottle prices.
     That group’s executive director Carroll Hughes said the attempt to change how Connecticut does business “has been resoundingly rejected by legislative leaders and individual legislators.”
     Under the existing 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.
     Hughes argues that eliminating minimum-bottle pricing would cause small package stores to go out of business and allow Total Wine & More to “dominate the marketplace as a predatory competitor.”
     He said the state has already allowed for the elimination of minimum-bottle pricing on certain items agreed to by the stores and the Liquor Control division of the Department of Consumer Protection.
     Hughes 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 if the law is changed.
     Cooper said his customers are “demanding retailers come into the 21st century.”
     He said their decision to file the federal lawsuit was really driven by consumers who can’t understand why they can buy the same bottle of wine in Massachusetts for less than in Connecticut.
     Cooper said the state would benefit from eliminating the bottle-price threshold because it would be able to recapture some of the sales currently going to other states. Hughes has argued that Connecticut would lose sales tax revenue on the sale of each bottle because the price would be lower.
     The lawsuit filed in U.S. District Court alleges that “Total Wine & More has been prevented from offering the best prices by an anticompetitive regime of statutes and regulations that intentional promotes horizontal and vertical price-fixing by Connecticut wholesalers of alcoholic beverages.”
     The lawsuit goes onto state that the manufacturers and wholesalers have used the law to maintain prices at levels “substantially above what fair and ordinary market forces would dictate.”
     A study done by the Distilled Spirits Council of the United States concluded, according to the lawsuit, that retail prices for wine and spirits in Connecticut are as much as 24 percent higher than prices offered for identical products in the surrounding states.
     Total Wine & More says “price-fixing by wholesalers, facilitated and impelled by the challenged provisions, constitutes a horizontal restraint of trade and a per se violation of the federal Sherman Act.”
     The retailer wants Connecticut’s minimum-price law and regulations voided. It is represented by James Shearin of Pullman and Comley.

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