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Federal courts: CT liquor law pricing not our business

| Feb 27, 2019 | Business Formation & Planning |

As a national news report recently noted, Connecticut’s liquor laws have been challenged by a major business chain as being “out of step with the 21st century.”

Federal judges don’t seem to care a whit about that. Successive courts considering the challenge have responded to it with what collectively amounts to an indifferent shrug.

“Whether or not the … scheme implemented by the state of Connecticut is wise is not a question for this court,” noted a district court judge back in 2017.

That scheme was challenged by mega-retailer Total Wine & More back in 2016. The company asserted in a federal complaint that state regulators were violating antitrust laws through adoption of a system that promoted price fixing by wholesalers across the state.

Total Wine charged that such an arrangement was broadly injurious to both select businesses and consumers. It stressed to the court that, while it wanted to offer discounted pricing to its customers, it was barred from doing so by state law. The result of that — confirmed through multi-sourced empirical evidence – has been far higher prices being charged to purchasers of alcohol in Connecticut than to buyers in surrounding states.

The above-cited court ruled that Connecticut’s law only promotes pricing “arrangements,” not unlawful price fixing. As such, the scheme does not present questions or issues relevant to federal law.

Total Wine believed that ruling to be in error, and appealed it to an appellate federal court.

The result was the same. That tribunal affirmed last week the lower court’s earlier dismissal of Total Wine’s case. The court held that Connecticut’s statutory pricing arrangements do not constitute fixing and thus do not require a federal preemption remedy.