Connecticut’s Post-and-Hold Out: Total Wine’s Challenge to The Liquor Control Act & Antitrust Implications

At first blush, Connecticut’s liquor laws serve the noble purpose of protecting the state’s small businesses. The policy argument for the regulations could go something like—maybe we don’t want lower alcohol prices in the state, maybe we want to advocate for temperance and protect local shops from big box chains. What the argument does not consider is the reality of who bears the cost and who profits from the laws as written. Prices in the alcoholic-beverage industry are controlled by wholesalers, without oversight by the state. Consumers pay higher prices and wholesalers mop up the profits. Under the laws, there is virtually no incentive for competition. Prices are stable, consistent, uniform, and high. Antitrust principles could not be more at odds with Connecticut’s regulatory scheme. But what about Connecticut’s authority to regulate the alcoholic-beverage industry without interference from the federal government? The doctrine of stateaction immunity recognizes state’s authority and limits federal government interference when the state is actively involved in the oversight of private market participants and prices. State laws only violate antitrust principles when private participants assume control over prices . Connecticut’s liquor laws do just that. The laws actually mandate price sharing. They leave price control of the alcoholic-beverage industry in the hands of the wholesalers, and consumers pay the price. This Note argues that Connecticut’s liquor laws are per se illegal because they always, or almost always, restrict competition. But that argument need not be interpreted as the last drop in the bucket for the local package store. There are other ways to protect small merchants. Connecticut has enacted, and can continue to enact laws that support local businesses and limit big box takeover. Connecticut should follow other states around the nation which have done away with similar laws and opened up the alcoholic-beverage market to healthy competition