End minimum pricing
It
is time for Connecticut state government to take its thumb off the scale when it comes to competition over the retail sale of beer, wine and spirits. Gov. Dannel P. Malloy is again seeking to reform a system that has discouraged competition, which has in turn forced consumers to pay more and lowered tax revenues flowing to the state.
The law now prohibits retailers from selling alcoholic beverages below cost. The Connecticut Package Stores Association has long defended this “minimum pricing” rule. They express fears that without minimum pricing they will not be able to compete with the large retailers — big-box stores, supermarkets and liquor outlets — who are better positioned to buy in bulk and discount prices than are the mom-and-pop package stores.
There is some truth in that. But it should not be the job of the state to try to rig the system in any business model’s favor. Consumers ultimately benefit by unrestrained pricing competition. And well-run small package store can compete in other ways — through personal service, by supplying products that appeal to their customer base and by offering the convenience of being just down the street.
Independent small operators could also band together in buying consortia to get pricing that approaches the larger competitors.
The administration faces a tough task in getting legislation approved over the objections of the package store association lobby. Malloy has tried and failed before. But the administration has seen success in breaking down other barriers erected by the trade group. Liquor outlets are now open on Sundays and until 9 p.m. on week nights, both changes long opposed by the package stores association.
In eastern Connecticut, business is lost across borders with Rhode Island and Massachusetts, where a lack of price controls allow loss-leader discounts to attract customers. Advocates for ending the minimum pricing restrictions estimate removing the minimum-pricing rule could produce upwards of $8 million in additional sales and excise tax revenues, which may give lawmakers the incentive they need to defy the lobby.
In this region, people are very aware that commerce does not end at the state borders. Sunday sales and more convenient hours have helped keep more consumers shopping in their home state. We urge the General Assembly to take the last step toward fair competition and repeal Connecticut’s minimum-pricing law.