• Retailers' & Producers'Response to Lawsuit• WBWWA's Responseto Lawsuit• 21st Amendment• Media Coverage
Defending a State’s Constitutional Right To Regulate the Sale and Distribution of Alcohol
Background
Costco Wholesale Corporation filed a lawsuit in February 2004 in U.S. District Court in Seattle that challenges Washington state’s regulatory system of safeguards governing the importation, distribution and sale of beer and wine in Washington.
If Costco’s legal challenge succeeds, it will destroy the three-tier regulatory system Washington put in place to license and control the distribution of beer and wine, a system designed and mandated by the legislature to prevent unregulated, unaccountable sales of alcohol.
The suit names as defendants the Washington State Liquor Control Board and its board members. The Washington Beer & Wine Wholesalers Association (WBWWA) was granted permission in May to intervene as a defendant since its members are an integral part of the state’s three-tier system for regulating the importation, distribution and sale of beer and wine.
Issues Raised
Costco’s position is that the state’s regulations and statutes restrict Costco’s ability to compete and, therefore violate the Commerce Clause of the U.S. Constitution and the federal Sherman Antitrust Act.
Specifically, Costco wants to be able to buy products directly from out-of-state suppliers at discounted prices on credit. It also wants to eliminate the state’s uniform pricing structure, which was put into place by the state to ensure alcohol prices do not drop to levels that would encourage over-consumption, to prevent retailers from using alcohol as a loss leader by selling it for less than they paid for it, and to ensure that large retailers are not favored over smaller ones.
The state’s and WBWWA’s position is that the state’s regulatory system does not conflict with federal antitrust policy. Rather, it is designed and mandated by the state legislature in a clear expression of state policy and is lawfully based on the power reserved to it under the 21st Amendment to the U.S. Constitution. The 21st Amendment gives individual states the power and right to control all aspects of alcohol production, consumption and distribution within their borders. The state’s three-tier system is designed to balance public safety/health concerns with the public demand for alcohol products. Its rules are dictated by the public’s interest and welfare – not Costco’s business model.
Please click here for the latest Costco lawsuit media stories.
Background
Costco Wholesale Corporation filed a lawsuit in February 2004 in U.S. District Court in Seattle that challenges Washington state’s regulatory system of safeguards governing the importation, distribution and sale of beer and wine in Washington.
If Costco’s legal challenge succeeds, it will destroy the three-tier regulatory system Washington put in place to license and control the distribution of beer and wine, a system designed and mandated by the legislature to prevent unregulated, unaccountable sales of alcohol.
The suit names as defendants the Washington State Liquor Control Board and its board members. The Washington Beer & Wine Wholesalers Association (WBWWA) was granted permission in May to intervene as a defendant since its members are an integral part of the state’s three-tier system for regulating the importation, distribution and sale of beer and wine.
Issues Raised
Costco’s position is that the state’s regulations and statutes restrict Costco’s ability to compete and, therefore violate the Commerce Clause of the U.S. Constitution and the federal Sherman Antitrust Act.
Specifically, Costco wants to be able to buy products directly from out-of-state suppliers at discounted prices on credit. It also wants to eliminate the state’s uniform pricing structure, which was put into place by the state to ensure alcohol prices do not drop to levels that would encourage over-consumption, to prevent retailers from using alcohol as a loss leader by selling it for less than they paid for it, and to ensure that large retailers are not favored over smaller ones.
The state’s and WBWWA’s position is that the state’s regulatory system does not conflict with federal antitrust policy. Rather, it is designed and mandated by the state legislature in a clear expression of state policy and is lawfully based on the power reserved to it under the 21st Amendment to the U.S. Constitution. The 21st Amendment gives individual states the power and right to control all aspects of alcohol production, consumption and distribution within their borders. The state’s three-tier system is designed to balance public safety/health concerns with the public demand for alcohol products. Its rules are dictated by the public’s interest and welfare – not Costco’s business model.
Please click here for the latest Costco lawsuit media stories.
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