Repeal of Massachusetts Liquor Price Posting Would Encourage Competition in the Sale of Alcoholic Beverages, Says FTC Staff

Federal Trade Commission staff member submitted a statement today to the Massachusetts Alcoholic Beverages Control Commission (MABCC) on the repeal of a Massachusetts rule that requires liquor wholesalers to file a price list prior to the month in which the list will be effective. The statement was issued in response to a request from MABCC which sought comments on whether the existing rule should be repealed. The staff concluded that repeal of the rule “would tend to encourage competition in the sale of alcoholic beverages in Massachusetts.”

The comments, given by Phoebe Morse, Director of the FTC’s Boston Regional Office, noted: “The staff of the Commission have had considerable experience assessing the competitive impact of regulations and business practices in the alcoholic beverages industry. In providing comments on particular statutes or regulations, we assess their likely effect on competition.”

The statement prepared by the FTC staff looked at the competitive effects of the rule by analyzing the information exchange aspects of the price posting, the requirement that posted prices remain in effect for one month, the ability of the liquor wholesaler to match competitors’ prices and the restrictions on the types of discounts that may be granted.

The staff concluded that “[t]he availability of comprehensive price information tends to make it easier for industry members to coordinate prices tacitly and to detect and discourage deviation from the consensus price.” On the requirement that postings remain in effect for one month they concluded that “[r]equiring posted prices to remain in effect for one month may harm competition by deterring price changes.” The staff analysis also concluded that “[t]he likely net effect of permitting wholesalers to match competitors’ price reductions is to maintain prices at a level higher than they would be in the absence of any price posting restrictions.” The analysis concluded by stating that “[t]he likely effect of these limitations on discounting is higher prices for Massachusetts consumers.”

“We believe that repeal of the price posting regulations would increase competition,” the FTC staff concluded.

These comments are the views of the staff of the Federal Trade Commission, and do not necessarily represent the views of the Commission or any individual Commissioner.

Copies of the staff’s comment are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

(FTC File No. SO37217)