State fines liquor chain for selling below minimum price
The Connecticut Department of Consumer Protection announced Thursday it is fining a Maryland-based liquor store chain $37,500 for violating state law on minimum pricing of alcohol, the same law the chain is challenging in federal court.
Total Wine & More this month filed a lawsuit claiming the state's decades-old law, which prohibits retailers from selling wine and liquor below a minimum price, violates the Sherman Anti-Trust Act and essentially creates a price-fixing system that protects "politically well-connected participants in Connecticut's alcohol beverage industry."
The Connecticut Package Store Association has stopped numerous attempts in the General Assembly to scrap the minimum pricing law. The association recently filed a formal complaint with state regulators, accusing Total Wine & More of already selling below the minimum price.
Democratic Gov. Dannel P. Malloy, who previously proposed legislation revamping Connecticut's minimum pricing law, thanked the consumer protection agency for its expedited investigation. But he also made it clear he still doesn't like the underlying law.
"Connecticut's minimum bottle pricing law is backwards and illogical," he said in a written statement. "It penalizes our residents by artificially charging them substantially more for a product than what they would pay in surrounding states. No other industry has a protection like this."
A spokesman for Total Wine & More didn't immediately return a message Thursday. The Department of Consumer Protection said Thursday's action does not affect the lawsuit challenging the state's pricing laws.
According to the state agency, the Bethesda, Maryland-based chain agreed to immediately stop all advertising and sales of alcoholic liquor below the minimum price at its four Connecticut locations.
"Immediately upon learning that Total Wine & More was advertising and selling products below what is permitted by the state's minimum price rules, DCP's Liquor Control Division opened an investigation," said Consumer Protection Commissioner Jonathan Harris.
In an earlier interview, Total Wine & More spokesman Edward Cooper said the company considers Connecticut's pricing law, which dates to 1981, as an "outlier" and particularly egregious compared to other states. It prevents retailers from selling wine and liquor below a minimum price, the wholesalers' posted price-per-bottle in a case. The minimum pricing for beer is the lowest posted price for the month when the beer is being sold.
"This is government okaying the wholesalers to set the price by which the retailers must sell their product to consumers and they set it at an artificially high level," Cooper said last week. "Customers in Connecticut are getting ripped off."
The package store association argues that scrapping the law would force 600 small stores out of business, allowing big chains like Total Wine & More to take over the market.
The Center for Alcohol Policy, which works with state policymakers and regulators, says more than a dozen states have minimum mark-up rules that prevent companies from selling a product below cost.