Total Wine wins lawsuit against Massachusetts on discount pricing

Total Wine continues its efforts to challenge state laws that restrict alcohol retailing. As Dan Adams reports for The Boston Globe, the chain alcohol store prevailed in a lawsuit brought by Massachusetts alleging that the store was selling their booze below-cost, in contravention of state law:

"A Boston judge has ruled that Massachusetts alcohol retailers can legally sell booze at deep discounts when they order it in bulk, rebutting state regulators who said the practice can violate a state law that prohibits selling alcohol at less than cost.

The decision Tuesday by Suffolk Superior Court Judge Robert B. Gordon came in response to a lawsuit brought by the country’s largest alcohol chain, Maryland-based Total Wine & More, against the state Alcoholic Beverages Control Commission.

In January, the agency slapped Total Wine’s Everett and Natick stores with several-day license suspensions for allegedly selling Smirnoff vodka, Bacardi rum, and other liquors for $1 to $6 below their wholesale costs. State alcohol laws and regulations forbid retailers from offering such below-cost 'loss leaders,' a policy the state says is necessary to prevent excessive drinking and predatory pricing.

Total Wine sued to overturn the license suspensions. The company argued its prices for consumers weren’t actually below its costs but were based on quantity discounts the company expected to receive from its wholesalers later on, after it had ordered enough of the products to qualify. The ABCC, Total Wine said, unfairly refused to acknowledge the true, ultimate cost of the liquor to the company, and instead looked only at initial invoices that listed a higher cost.

Gordon, the judge, agreed, saying the ABCC’s 'starchy' and 'semantic' definition of cost 'bears no rational relationship to the legislative policy of prohibiting anti-competitive pricing practices.'

'There was clearly no predatory pricing carried out in this case,' Gordon wrote in his decision, 'only a salutary effort by a retailer to pass along savings derived from volume purchasing at the wholesale level to its customers. This is something the law should promote rather than punish.'..."

Read the whole article here.