The issue presented was whether Section 1 of the Sherman Act preempts state laws facilitating unsupervised private price-fixing, such as Connecticut’s—which requires private beer, wine and liquor wholesalers to “post” their prices in advance so that all competing wholesalers can match them, to “hold” those prices for a month and to refrain from offering quantity discounts to retailers.
It is important to note that the wholesalers in this scheme determine not only the case prices paid by retailers, but also the minimum bottle prices paid by consumers. Section 1 of the Sherman Act prohibits contracts, combinations and conspiracies in restraint of trade or commerce. Total Wine argued that the Connecticut “post and hold” laws effectively fix prices and reduce competition. Price fixing is a per se violation of the Sherman Act.
The district court held:
Total Wine’s challenges to the post and hold provisions and minimum retail price provisions are dismissed, because these provisions constitute hybrid restraints that receive rule of reason scrutiny and therefore cannot be preempted. Total Wine’s claim that the price discrimination prohibition is preempted is also dismissed, because that provision is a unilateral restraint outside the scope of the Sherman Act.
Total Wine appealed to the 2nd Cir. Court of Appeals. The 2nd Cir. affirmed the district court’s ruling. The ruling was decided on the basis of established antitrust law and did not analyze the issues with an eye toward state regulatory authority under the 21st Amendment. In response, Total Wine filed a Writ of Certiorari to the U.S. Supreme Court. The Court, however, denied cert. ending a high-profile antitrust challenge to state alcohol laws.