Guest Column: Paul Pisano, National Beer Wholesalers Association
State alcohol pricing laws have several interrelated forms, but all seek to “level the playing field” with pricing practices between suppliers and their wholesalers or supplier/wholesalers with retailers. The concept that the small convenience store should have the same shot at the pricing of a big box club store is something many in the alcohol industry may have taken for granted, but there are powerful opponents of these laws. However, recent federal actions on pricing laws can bolster state alcohol pricing efforts.
The Robinson Patman Act was passed in 1936 to address the concerns about growing national retailers of the day, namely the Great Atlantic and Pacific Tea (A&P) grocery chain. The concern that this growing national retailer would dominate, and harm Main Street businesses is a policy and business concern that survives to this date though A&P no longer survives. The Robinson-Patman Act (RPA) seeks to curb “unfair” business practices that prevent smaller retailers from competing with their larger competitors due to the latter’s ability to get better pricing.
Under the RPA, sellers of goods and commodities are not allowed to engage in price discrimination for goods of like grade and quality. While the law seems relatively straightforward, the enforcement of the law by federal agencies and the law’s treatment in the courts have been notoriously challenging. The law has not been actively enforced by the government for several decades. Recently, the Federal Trade Commission (FTC) has expressed interest in revitalizing this law and has announced investigations into businesses relating to pricing practices that potentially implicate the RPA. One of the rumored areas of focus is the activities of the nation’s largest alcohol wholesaler.[1]
Upon examination the FTC will find that there are a series of state alcohol pricing laws that are like the RPA on steroids at the state level. While the federal RPA may have been dormant, there are a variety of tools state alcohol regulators activate to regulate pricing and give big and small retailers equal treatment. Not all states have these laws. Some have several of these laws, others have none. All this alcohol policy experimentation is a result of the 50 different state alcohol markets set up after the passage of the 21st Amendment.
34 states have laws that ban wholesalers from discriminating in price between retailers and 29 have laws that prevent brewers from discriminating between wholesalers.[2] Additionally, 18 states ban the volume discount of alcohol. Twenty require wholesalers to post their alcohol prices while another fifteen require prices to be held for a certain period. Eight states ban the sale of alcohol below cost and six require the imposition of a minimum markup. All these state alcohol pricing laws are specific to each state, and many have unique variations built into their regulatory structure. Parties have noted the close relationship between RPA, state level RPA laws, and state alcohol pricing laws.[3]
The public is satisfied with state alcohol regulation and their impact on pricing. In a recent survey for the Center for Alcohol Policy only 29% said lowering the cost of alcohol should be a priority of alcohol regulation. Rather, most of the attention of the survey respondents was using alcohol regulation to protect public health and safety such as the prevention of drunk driving.[4]
However, some of the largest players in alcohol industry have chafed at state alcohol laws and there have been various lawsuits by the largest retailers to change these laws under the guise of “competition.” Some of the nation’s largest alcohol retailers have sought to get pricing advantages over their smaller competitors by challenging state alcohol pricing laws in court with the Supreme Court declining to take up their challenge as recently as 2020.[5] The effort to attack some of these state alcohol pricing laws even paradoxically has some support in the very same Biden Administration that is at the same time trying to revitalize the RPA.[6]
The public health implications of the price of alcohol are well known and I would defer to the public health community to better address their documented concerns about cheap alcohol’s impact on society.[7] The effort to create and maintain a pro-competitive, level playing field, the aim of the R-P Act, has continued to be a purpose and practice of state alcoholic beverage regulation even as the federal government ceased enforcing said Act. As the FTC digs into its RPA study, it will find that state alcohol pricing laws are doing what the RPA intended
[1] https://www.politico.com/news/2023/03/30/feds-target-alcohol-pricing-in-new-antitrust-probe-00089676
[2] For example, CT Sec. 30-68k. Price discrimination prohibited. No holder of any wholesaler’s permit shall ship, transport or deliver within this state or any territory therein or sell or offer for sale, to a purchaser holding a permit for the sale of alcoholic liquor for on or off premises consumption, any brand of alcoholic liquor, including cordials, as defined in section 30-1, at a bottle, can or case price higher than the lowest price at which such item is then being sold or offered for sale or shipped, transported or delivered by such wholesaler to any other such purchaser to which the wholesaler sells, offers for sale, ships, transports or delivers that brand of alcoholic liquor within this state.
[3] “These prohibitions mirror similar price-discrimination provisions in Federal antitrust law under 15 U.S.C. § 13 (the “Robinson Patman Act”) and Connecticut’s state-law equivalent, Conn. Gen. Stat. § 35-45(a).” Reply Brief of Intervenors-Respondents in Opposition to Petition for Writ of Certiorari. https://www.alcohollawreview.com/wp-content/uploads/2020/01/tfwsCTinterveresponsetocert.pdf
[4] https://www.centerforalcoholpolicy.org/wp-content/uploads/2023/03/2023-CAP-Survey-Results-Memo.pdf
[5] E.g. Conn. Fine Wine & Spirits, LLC. v. Seagull, 932 F.3d 22 (2d Cir. 2019), cert. denied, 140 S. Ct. 2641 (2020).
[6] Department of Treasury Competition in the Markets for Beer, Wine, and Spirits February 2022
[7] https://www.cdc.gov/policy/opaph/hi5/alcoholpricing/index.html
Leave a Reply