It’s finally happened. Someone besides the governor is taking meaningful action to dismantle Connecticut’s protection racket for package stores. And if the state doesn’t get its act together, the legal bills could mount.
Total Wine & More, which operates 150 stores in 21 states (four of them in Connecticut), has filed a federal lawsuit challenging the state’s indefensible practice of mandating above-cost minimum per-bottle prices on wine and liquor in package stores.
In case you didn’t know it — Connecticut has the most oppressive and anti-competitive laws governing the sale and distribution of alcohol in the country. It punishes the consumer in the name of protecting an entire class of retailers — mostly mom-and-pop package store owners — from meaningful competition. Legislative attempts to move toward a free market have thus far proved fruitless.
The lawsuit filed in U.S. District Court in New Haven charges that the company “has been prevented from offering the best prices by an anticompetitive regime of statutes and regulations that intentionally promotes horizontal and vertical price-fixing by Connecticut wholesalers of alcoholic beverages” and that both manufacturers and wholesalers have used the law to maintain prices at levels “substantially above what fair and ordinary market forces would dictate.”
Music to my ears. I’ve been saying this for years. The package store owners, led by lobbyist Carroll Hughes, have countered that half the state’s package stores would go out of business if they actually had to compete with one another without the protection of the state.
An industry study estimates that with the elimination of minimum pricing Connecticut will gain between $5.2 million and $8.1 million annually in new excise and sales taxes because Nutmeggers won’t flee the state in droves to buy in Massachusetts and New Hampshire.
Hughes, however, insists that the free market will result in less revenue to the state. If the price per bottle is lowered through the abolition of minimum pricing, then the state’s 6.35 percent sales tax will collect less revenue from the sale of each bottle, he claims with a straight face.
But of course, Hughes offers no evidence to support his hypotheses. Indeed, he predicted some stores would go out of business after Gov. Dannel P. Malloy in 2012 convinced legislators to allow the package stores to open on Sundays. I haven’t heard Hughes say, “See, I told you so,” because it’s now obvious that allowing stores the option to open on Sundays hasn’t put any of them out of business. Those that that don’t have the resources, or are otherwise not inclined to open on the Sabbath, simply keep their doors closed.
Named in the lawsuit as defendants were Commissioner Jonathan Harris of the Department of Consumer Protection and John Suchy, director of the Division of Liquor Control. Ironically, Harris was appointed by Malloy and has joined the governor in opposition to minimum pricing.
In a brazen show of rebellion, Total Wine & More has purchased full-page ads in state newspapers bragging that the company has put dozens of liquor and wine items on sale well below the state minimum.
It’s almost as if the liquor giant with 150 stores is calling the state’s bluff: “We don’t care about the fines. Go ahead and come after us. If you do, it will enhance our standing in court by demonstrating how we’ve been harmed by your stupid laws.”
The lawsuit alleges that the state’s alcoholic beverage policy amounts to “price-fixing by wholesalers” and thus runs afoul of the federal Sherman Anti-Trust Act of 1890.
“It’s time for Connecticut to finally enter the 21st century when it comes to the sale of wine and spirits,” Edward Cooper, Total Wine & More’s vice president for public affairs, said in a news release announcing the lawsuit. “The loser in the current equation is the consumer.”
But, absent court intervention, it’s really the General Assembly that needs convincing. Trembling at the prospect of offending the state’s 1,150 package store owners, lawmakers have shied away from taking legislative action to effect what I call “liquor justice.”
One package store owner I spoke to a few years ago told me he thought those who argued for the abolition of minimum pricing were being “disrespectful” to him and his colleagues. Nope. I think arguing that we should pay more to protect him from competition is disrespectful to consumers. Now we’ll see what a federal judge thinks.
Contributing op-ed columnist Terry Cowgill lives in Lakeville, blogs at ctdevilsadvocate.com and is news editor of The Berkshire Record in Great Barrington, Mass. Follow him on Twitter @terrycowgill.
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