HOW WILL COSTCO’S WIN IMPACT THE INDUSTRY?

As most of you are probably well aware, Costco won its lawsuit against the State of Washington and fulfilled a prediction many industry insiders had already made. Judge Pechman ruled late Friday that many provisions in the Washington state liquor control code are illegal antitrust violations, including their cash law, minimum markup, the ban on central warehousing, and price posting. She agreed with Costco that those provisions along with other rules unfairly prevent large retailers from being competitive with the usual marketing tools available to them on other products.


Furthermore, Judge Pechman ruled that the 21st Amendment does not protect the alcohol code from antitrust scrutiny and that laws such as minimum markup do not help promote temperance or maintain an orderly market. “The restraints challenged by Costco are plainly anticompetitive, and there is no dispute that these restraints increase the average cost of beer and wine in Washington," said Judge Pechman. She wrote in her decision that “the court finds that the state's interest do not trump the federal interest in promoting competition” and that “the citizens of this nation have long relied upon a healthy competitive market to distribute goods efficiently and economically.” Washington State has 30 days to appeal but said it will review the decision and decide whether to appeal sometime today. The case will then likely move to the Ninth Circuit Court of Appeals and may ultimately land itself in the Supreme Court as Costco moves to other states with similar alcohol codes. As for now, though, it’s only one state and not the end of the world, yet.