Legal Implications of Minimum
Pricing Provisions:
NABCA Symposium on Alcohol Beverage Law & Regulation
9 March 2010
Arlington, Virginia
United States
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Minimum pricing (price floors)
Minimum mark-up
Volume discount bans
Resale price maintenance
Federal v. State v. Private
• Federal / EU
– It’s the law of the land.
• State / Member Country
– Preempted by Sherman Act?
• Private Actors
– Price Fixing.
– Eichenseer v. Madison-Dane County Tavern League,
Inc., Appeal No. 2005AP1063, 2006 Wisc. App. Lexis
1006 (Wisc. Court of App. Dist. 4, Oct. 26, 2006).
Another Antitrust Warning
Minimum Mark-Up
• Upheld by 9th Circuit in the Costco case.
– Costco Wholesale Corp. v. Hoen, 522 F.3d. 874 (9th
Cir. 2008), superseding, 514 F.3d 915 (9th Cir.
2008).
• Wasn’t at issue in 4th Circuit TFWS, but would
have been struck down if it was.
Volume Discount Bans
• Upheld by the 9th Circuit (and by Louisiana).
– Costco Wholesale Corp. v. Hoen, 522 F.3d. 874 (9th Cir.
2008), superseding, 514 F.3d 915 (9th Cir. 2008).
– Manuel v. State of Louisiana Office of Alcohol and Tobacco
Control, et al., 982 So.2d 316, 2008 WL 1902437 (La. App. 3
Cir. Apr. 30, 2008).
• Struck down by the 4th Circuit.
– TFWS Inc. v. Franchot, 572 F.3d 186 (4th Cir. July 15, 2009).
Resale Price Maintenance
• Minimum RPM: a supplier sets the minimum
price that resellers can charge their customers
• 1911: Dr. Miles decision – resale price
maintenance agreements are per se illegal.
• 2007: Leegin decision – resale price
maintenance agreements are analyzed by rule of
reason.
Resale Price Maintenance
• Currently not per se illegal at the federal level
per Supreme Court Leegin decision.
• But still per se illegal at the state level
– Maryland Commercial Law Section 11-204(b).
• Federal bills in both House and Senate pending
that would make it per se illegal.
Minimum Pricing
• Not the subject of litigation. Yet.
• State law could be challenged under the
Sherman Act.
United Kingdom
• Minimum pricing proposal
• European Court of Justice opinion in tobacco
case.
– “measures based on Article 30 of the Treaty cannot
be justified unless they are necessary in order to
attain the objective pursued by that article and that
objective is not capable of being attained by
measures which are less restrictive of intraCommunity trade.”
Sound familiar?
• "In addition, the States can take less
restrictive steps to minimize the risk
that minors will order wine by mail.”
– Granholm v. Heald, 544 U.S.. 460, 491 (2005)
Why not just raise taxes?
• The United Kingdom exemplifies the problem of
using taxes alone to control prices.
– Even before the 2008 tax increase, the U.K. had
some of the highest taxes on alcohol among
European countries.
Taxes are just one arrow in
the quiver
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Taxes
Minimum prices
Minimum mark-up
Bans on Discount Promotions (Happy Hour
specials)
• Bans on Price Discrimination
All Serve to Increase Prices
What does the future hold?
A lot more mud.
Questions?
Karin Moore
VP & Co-General Counsel
Wine & Spirits Wholesalers of America
202.243.7511
[email protected]