THE NEXT PHASE IN THE COSTCO DRAMA

Now that the Ninth Circuit Court of Appeals has extended the stay of Judge Pechman’s original ruling, the court is likely to issue a ruling relatively soon. The question remains, however, which way the court will turn. As mentioned in our sister publication, Harry Schuhmacher’s Beer Business Daily: “They seemed sympathetic to the 21st Amendment concerns, but not sold on Washington State's post-and-hold law.”

There’s a chance that after the ruling, the case could go on to the Supreme Court for those guys to decide whether Washington’s three-tier laws are violations of antitrust, or the Sherman Act.

One of the big issues was whether Washington's price post-and-hold law is materially different from Oregon's similar price posting law, which was deemed unconstitutional. The state argued that Oregon's law allowed distributors to see the prices before they were posted, while Washington's doesn't, so it is very different.

However, the Judges didn’t seem to agree. According to BBD, the judges repeatedly remarked that the post-and-hold law should be considered separately because, presumably, it's unconstitutional. However, they seemed to think that Washington's ban on credit, ban on quantity discounts, and same-price-for-everybody structure may be acceptable. Central warehousing is the real wildcard here. They didn't spend much time on it, and it is tough to know what they are thinking on this.