Utah Booze Law Called Antitrust Conspiracy

SALT LAKE CITY (CN) - With the state Senate president saying, "We don't want to get our tourism industry tied to alcohol," Utah enacted a law that prohibits reduced rates on drinks in bars - known in Utah as social clubs - and other onerous restrictions, the nonprofit Utah Hospitality Association says in a federal antitrust complaint.

Gov. Gary Herbert sign Senate Bill 314 into law in March and parts of it took effect July 1; other parts, including changes to a quota system for social clubs, are to take effect on July 1, 2012.

Lawmakers claimed the emendations of the state's Alcohol and Beverage Control Act were a victory for "community standards." The Hospitality Association calls it an antitrust conspiracy, price-fixing and illegal restraint of trade.

S.B. 314's "amendments include (1) the elimination of discount pricing of alcoholic beverages offered by social clubs; and (2) the additional requirement of linking the issuance of liquor licenses to social clubs, not only to the population quotas of the State of Utah but also to the number of public safety officers employed by the State of Utah," according to the complaint.

Utah, home to the Mormon Church, which prohibits consumption of alcohol, dropped a 40-year-old private club system that forced patrons to buy memberships in order to enter bars under then-Gov. John Huntsman Jr. in 2009.

Liquor licenses that allow "social clubs" to operate are made available based on population quotas that were established in 1990. New licenses are unavailable today and will be for another 2 years as the state population catches up to quotas, state officials say.

Under the new law, as of July 1, 2012, licenses will also be made available based on the number of public safety officers employed by the state. At that time, clubs will also be able to sell their licenses privately.

"The combination of extreme scarcity of the licenses coupled with the private sale of licenses results in an unreasonable restraint on trade," the association says.

State Sen. John Valentine, who praised The Church of Jesus Christ of Latter-day Saints, Mothers Against Drunk Driving and parent-teacher associations as his supporters, sponsored the bill.

"They say this is a reasonable balance between controlling alcohol consumption and having a hospitable state for people to come to," Valentine said, according to the complaint.

Senate President Michael Waddoups added, "We don't want to get our tourism industry tied to alcohol. ... We are not going to become Las Vegas or New Orleans. ... [W]hen we see abuse of family members because someone under [sic] the influence of alcohol or drugs, these sorts of things are contrary to community standards that we have in Utah," the complaint states.

But the Hospitality Association says the "hybrid restraints" are "per se violations of the Sherman Act."

"Although the State of Utah claims that the liquor price maintenance law was passed to promote the state's interests under the Twenty-first Amendment, including temperance, compulsory resale price maintenance on intoxicating liquors has no significant effect upon the consumption of alcoholic beverages or upon temperance," the complaint states.

The Hospitality Association says it "was established in 1993 to promote tourism within the state of Utah, effect changes in Utah's liquor laws, and to help curb excessive drinking, including drinking under the influence."

It is joined by two Doe co-plaintiffs, one of whom owns a bar and another whose license application was denied.

They want enforcement of SB 314 enjoined under the Sherman Act, compensatory and treble damages and costs. They are represented by Lisa Marcy.

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