Should administrative rules that keep paperwork down for alcohol regulatory agencies be enforced to the detriment of pricing to consumers? Massachusetts thinks so.
The Massachusetts Supreme Judicial Court just upheld the Massachusetts Alcoholic Beverages Control Commission’s fine and suspension of two Total Wine stores after a trial court found against those fines and ruled in favor of Total Wine.
The facts from the opinion (linked below) state that the MA ABCC fined two Total Wine stores finding they were selling alcoholic beverages in violation of an MA ABCC regulation that prohibits retailers from selling below the cost listed on the invoices for the purchase of the discounted bottles. Multiple cumulative quantity discounts offered to Total Wine over several purchases and invoices reduced the actual cost to Total Wine for those bottles to an amount below what Total Wine sold them to consumers for, but the initial purchase and initial invoice did not reflect the total discounts and showed a price for certain bottles above the price Total Wine sold them for.
The trial court found in favor of Total Wine against the ABCC’s decision holding that the Commission’s interpretation was inflexible and bore no rational connection to the purpose of the governing statutory scheme which was to prohibit unfair competitive tactics like predatory pricing. MA’s highest court reversed finding that the plain language of the regulation involved prohibited the practice and the ABCC’s enforcement was within its authority and faced with an administrative task of dealing with one invoice versus having to review multiple invoices to check these types of pricing violations, the ABCC deserved a break.
Yes, the court decided against discounts for consumers that complied with the language of the regulation (no pricing below cost) but not the sum edict (no pricing except what’s shown on the initial invoice) (invoices and credit memos had been issued creating a full paper trail showing the discounts and allowing someone to verify the actual cost).
This appears to be based solely on the claimed administrative burden created for the Massachusetts Alcoholic Beverages Control Commission by stretching discounts over several transactions and through multiple invoices and records:
We do not think it unreasonable for an agency with limited resources to prioritize administrability in order to “avoid[ ] … continuing uncertainty that would inevitably accompany any purely case-by-case approach like the one [Total Wine] advocates” (quotation and citation omitted). Mayo Found. for Med. Educ. & Research v. United States, 562 U.S. 44 … (2011). Nor is it unreasonable for the commission to guard against its investigators needing to cobble together an undefined amount of paperwork in order to document the actual net “cost” of each and every bottle of liquor or wine. The commission’s interpretation of § 2.04(1), which requires all pricing variables to appear on the same document, avoids all of the uncertainties discussed supra by providing for a uniform, bright-line rule to guide its enforcement — one that comports directly with the plain text of the regulation. It naturally follows that requiring all discounts and credits to appear on the single invoice applicable to a sale of liquor or wine is a reasonable means of ensuring compliance with the statutes and rules the commission is obligated to enforce.
So, even where the MA ABCC might be able to just create a form asking for proof and for the retailer to “show its math” placing all the work excepting the final review back on the retailer – the highest court in MA believes it should just be able to tell consumers, sorry, you can’t get that pricing because the entity selling to the retailer didn’t want to award a volume discount up front when, perhaps, the discount wasn’t yet earned.
I don’t want to fall back on a trope of asking for whom a state government works, but the fact that the court was willing to stop the analysis at the retailer level and not consider the economic benefit to the citizens of Massachusetts apart from reasoning that retailers could still offer the discounts provided they were properly reflected on invoices, means they sidestepped the hard question. If a discount only gets applied after 200 bottles, and the first part of the year involves 200 bottles, then consumers who are first to the store for those 200 get forced to pay an unfair price and get no discount while the consumers that wait get a greater potential discount for bottles 201 and beyond whereas the Total Wine method means consumers buying at any time get the discount, applied evenly, over the year.
Forcing businesses into transaction methods that hinder consumer price benefits, regardless of the commodity’s status as “demon rum” seems like an odd way for the state to foster competition, growth, and to demonstrate that it is NOT arbitrarily or capriciously exercising authority granted by those same consumers.
- You can read the opinion here.
- You can read the opening brief from the Massachusetts Alcoholic Beverages Control Commission here.
- You can read the Amicus Brief filed by the Massachusetts Package Store Association here.
- You can read Total Wine’s Response brief here.
- You can read the reply brief from the Massachusetts Alcoholic Beverages Control Commission here.