Under § 101-bb of New York's Alcoholic Beverage Control Law and
implementing regulations of the State Liquor Authority (SLA),
liquor retailers must charge at least 112 percent of the
wholesaler's "posted" bottle price in effect at the time the
retailer sells or offers to sell the item. Wholesalers must file
monthly "posted" bottle prices and case prices for an item with the
SLA, and may reduce the posted case price for an item without
reducing its bottle price. Since retailers generally purchase
liquor by the case, wholesalers thus can compel retailers to charge
more than 112 percent of the actual wholesale cost to the retailer.
As a result of appellant retailer's selling certain bottles of
liquor for less than 112 percent of the posted bottle price, its
license was suspended for 10 days and it forfeited a bond.
Appellant sought relief from the penalties on the ground that §
101-bb violated § 1 of the Sherman Act. A New York Supreme Court
denied relief, but the Appellate Division reversed. The New York
Court of Appeals upheld the validity of § 101-bb and reinstated the
penalties. It held that § 101-bb was not immune under the state
action exemption from the antitrust laws set forth in
Parker v.
Brown, 317 U. S. 341. The
Court of Appeals nevertheless concluded that the statute was a
proper exercise of powers reserved to the State by the Twenty-first
Amendment.
Held:
1. Section 101-bb is inconsistent with § 1 of the Sherman Act.
Resale price maintenance has long been regarded as a
per
se antitrust violation. The New York statute, which applies to
all liquor wholesalers and retailers, allows "vertical control" by
wholesalers of retail prices. Such industry-wide resale
price-fixing is virtually certain to reduce both interbrand and
intrabrand competition, because it prevents wholesalers from
allowing or requiring retail price competition.
Cf. California
Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc.,
445 U. S. 97. Pp.
479 U. S.
341-343.
2. New York's pricing system is not valid under the state action
exemption from the antitrust laws. The State's system does meet the
first requirement of the two-part test for determining immunity
under
Parker v. Brown, supra, that the challenged
restraint be "one clearly articulated and affirmatively expressed
as state policy." However,
Page 479 U. S. 336
New York's liquor pricing system does not meet the second
requirement that the State's policy be "actively supervised" by the
State itself. New York simply authorizes price setting and enforces
the prices established by private parties. The State has displaced
competition among liquor retailers without substituting an adequate
system of regulation.
Cf. California Retail Liquor Dealers
Assn. v. Midcal Aluminum, Inc., supra. Pp.
479 U. S.
343-345.
3. New York's pricing system is not valid under the Twenty-first
Amendment. Although § 2 of the Amendment qualifies the federal
commerce power, the Amendment does not operate to "repeal" the
Commerce Clause wherever state regulation of intoxicating liquors
is concerned. The question in each case is whether the interests
implicated by a state regulation are so closely related to the
powers preserved by the Twenty-first Amendment that the regulation
may prevail, notwithstanding that its requirements directly
conflict with express federal policies. Pp.
479 U. S.
346-352.
(a) The State's asserted interest in protecting small retailers
does not suffice to afford immunity from the Sherman Act. Although
the New York Court of Appeals correctly concluded that the purpose
of the 12 percent minimum markup was to protect those retailers,
the court made no findings that the purpose of the "bottle price"
definition of cost was to protect small retailers, and cited no
legislative or other findings that either the markup or the "bottle
price" definition of cost has been effective in preserving the
retailers. The State's resale price maintenance system directly
conflicts with the "familiar and substantial" federal interest in
enforcing the antitrust laws. Pp.
479 U. S.
348-351.
(b) It is not necessary to consider whether New York's pricing
system can be upheld as an exercise of the State's power to promote
temperance. The Court of Appeals did not find that the statute was
intended to promote temperance, or that it does so. This Court
accords great weight to the views of the State's highest court on
state law matters, and customarily accepts the factual findings of
state courts in the absence of exceptional circumstances. No such
exceptional circumstances appear in this case. Pp.
479 U. S.
351-352.
64 N.Y.2d 504, 479 N.E.2d 779, reversed and remanded.
POWELL, J., delivered the opinion of the Court, in which
BRENNAN, WHITE, MARSHALL, BLACKMUN, STEVENS, and SCALIA, JJ.,
joined. O'CONNOR, J., filed a dissenting opinion, in which
REHNQUIST, C. J., joined,
post, p.
479 U. S.
352.
Page 479 U. S. 337
JUSTICE POWELL delivered the opinion of the Court.
The State of New York requires retailers to charge at least 112
percent of the "posted" wholesale price for liquor, but permits
wholesalers to sell to retailers at less than the "posted" price.
The question presented is whether this pricing system is valid
under either the state action exemption from the antitrust laws or
the Twenty-first Amendment.
I
A
Wholesalers of liquor in the State of New York must file, or
"post," monthly price schedules with the State Liquor Authority
(SLA). N.Y.Alco.Bev.Cont.Law (ABC Law)
Page 479 U. S. 338
§ 101-b (McKinney 1970 and Supp. 1986). [
Footnote 1] The schedules must report, "with respect to
each item," "the bottle and case price to retailers." §
101-b(3)(b). The ABC Law itself does not require that the posted
case price of an item bear any relation to its posted bottle price.
The SLA, however, has promulgated a rule stating that, for cases
containing 48 or fewer bottles, the posted bottle price multiplied
by the number of bottles in a case must exceed the posted case
price by a "breakage" surcharge of $1.92. SLA Rule 16.4(e), 9 NYCRR
§ 65.4(e) (1980). [
Footnote
2]
Retailers of liquor may not sell below "cost." ABC Law, §
101-bb(2). [
Footnote 3] The
statute defines "cost" as "the price of such
Page 479 U. S. 339
item of liquor to the retailer plus twelve percentum of such
price." § 101-bb(2)(b). "Price," in turn, is defined as the posted
bottle price in effect at the time the retailer sells or offers to
sell the item.
Ibid. Although the statute defines retail
cost in terms of the wholesaler's posted bottle price, retailers
generally purchase liquor by the case. The SLA expressly has
authorized wholesalers to reduce, or "post off," the case price of
an item without reducing the posted bottle price of the item. SLA
Bulletin 471 (June 29, 1973). [
Footnote 4] By reducing the case price without reducing
the bottle price,
Page 479 U. S. 340
wholesalers can compel retailers to charge more than 112 percent
of the actual wholesale cost. Similarly, because § 101-bb(2)(b)
defines "cost" in terms of the posted bottle price in effect when
the retailer sells or offers to sell the item, wholesalers can sell
retailers large quantities in a month when prices are low and then
require the retailers to sell at an abnormally high markup by
raising the bottle price in succeeding months. The New York retail
pricing system thus permits wholesalers to set retail prices, and
retail markups, without regard to actual retail costs. New York
wholesalers advertise in trade publications that their "post offs"
will guarantee retailers large markups, sometimes in excess of 30
percent. App. 32-35. Wholesalers also advertise that buying large
quantities while wholesale prices are low will result in extra
retail profits after wholesale prices are raised. App. to Juris.
Statement 101A. The effect of this complex of statutory provisions
and regulations is to permit wholesalers to maintain retail prices
at artificially high levels.
B
Appellant 324 Liquor Corporation sold two bottles of liquor to
SLA investigators in June, 1981, for less than 112 percent of the
posted bottle price. Because the wholesalers had "posted off" their
June, 1981, case prices without reducing the posted bottle prices,
appellant's retail prices represented an 18 percent markup over its
actual wholesale cost. As a result of this violation, appellant's
license was suspended for 10 days and it forfeited a $1,000 bond.
Appellant sought relief from the penalties on the ground that §
101-bb violates § 1 of the Sherman Act, 15 U.S.C. § 1. A New York
Supreme Court denied the petition.
324 Liquor Corp. v.
McLaughlin, 119 Misc.2d 746, 464 N.Y.S.2d 355 (1983). The
Appellate Division reversed.
324 Liquor Corp. v.
McLaughlin, 102
Page 479 U. S. 341
App.Div.2d 607, 478 N.Y.S.2d 615 (1984). The New York Court of
Appeals upheld the validity of § 101-bb and reinstated the
penalties.
J.A.J. Liquor Store, Inc. v. New York State Liquor
Authority, 64 N.Y.2d 504, 479 N.E.2d 779 (1985). The Court of
Appeals held that § 101-bb is not immune under the state action
doctrine of
Parker v. Brown, 317 U.
S. 341 (1943), because the State does not actively
supervise the resale price maintenance system. The court
nevertheless concluded that the statute is a proper exercise of
powers reserved to the State by the Twenty-first Amendment,
because
"the State interest in protecting retailers which underlies [the
statute] is of sufficient magnitude to override the Federal policy
expressed in the antitrust laws."
J.A.J. Liquor Store, Inc. v. New York State Liquor
Authority, supra, at 522, 479 N.E.2d at 789. We noted probable
jurisdiction, 475 U.S. 1080 (1986), and we now reverse.
II
In
California Retail Liquor Dealers Assn. v. Midcal
Aluminum, Inc., 445 U. S. 97
(1980), we invalidated a California statute requiring all
producers, wholesalers, and rectifiers of wine to file fair trade
contracts or price schedules with the State.
Midcal
establishes the framework for our analysis of New York's liquor
pricing system.
A
The "threshold question," in this case as in
Midcal, is
whether the State's pricing system is inconsistent with the
antitrust laws.
Id. at
445 U. S. 102.
Section 101-bb imposes a regime of resale price maintenance on all
New York liquor retailers. Resale price maintenance has been a
per se violation of § 1 of the Sherman Act "since the
early years of national antitrust enforcement."
Monsanto Co. v.
Spray-Rite Service Corp., 465 U. S. 752,
465 U. S. 761
(1984).
See Dr. Miles Medical Co. v. John D. Park & Sons
Co., 220 U. S. 373,
220 U. S.
404-409 (1911). Our recent decisions recognize the
possibility that a vertical restraint imposed by a single
manufacturer or wholesaler
Page 479 U. S. 342
may stimulate interbrand competition even as it reduces
intrabrand competition.
Continental T.V., Inc. v. GTE Sylvania
Inc., 433 U. S. 36,
433 U. S. 51-52
(1977). Accordingly, we have held that concerted nonprice
restrictions imposed by a single manufacturer are to be judged
under the rule of reason.
Id. at
433 U. S. 59. We
also have held that a single manufacturer may announce resale
prices in advance and refuse to deal with those who fail to comply.
Monsanto Co. v. Spray-Rite Service Corp., supra, at
465 U. S. 761;
United States v. Colgate & Co., 250 U.
S. 300,
250 U. S. 307
(1919). Neither of these qualifications to the
per se rule
applies in this case. Section 101-bb directly restricts retail
prices, and retailers are subject to penalties for failure to
adhere to the resale price schedules. The New York statute,
moreover, applies to
all wholesalers and retailers of
liquor. We have noted that industry-wide resale price maintenance
also may facilitate cartelization.
Continental T.V., Inc. v.
GTE Sylvania Inc., supra, at
433 U. S. 51, n.
18. Mandatory industry-wide resale price-fixing is virtually
certain to reduce interbrand competition as well as intrabrand
competition, because it prevents manufacturers and wholesalers from
allowing or requiring retail price competition. The New York
statute specifically forbids retailers from reducing the minimum
prices set by wholesalers.
The antitrust violation in this case is essentially similar to
the violation in
Midcal. It is true that the wholesalers
in
Midcal were required to adhere to a single fair trade
contract or price schedule for each geographical area. 445 U.S. at
445 U. S.
99-100.
Midcal therefore involved horizontal as
well as vertical price-fixing. Although the horizontal restraint in
Midcal may have provided an additional reason for
invalidating the statute, our decision in
Midcal rested on
the "vertical control" of wine producers, who held "the power to
prevent price competition by dictating the prices charged by
wholesalers."
Id. at
445 U. S. 103.
As we explained in
Rice v. Norman Williams Co.,
458 U. S. 654
(1982), the California statute
Page 479 U. S. 343
was invalidated because "it
mandated resale price
maintenance, an activity that has long been regarded as a
per
se violation of the Sherman Act."
Id. at
458 U. S.
659-660 (emphasis in original; footnote omitted). We
hold that ABC Law § 101-bb is inconsistent with § 1 of the Sherman
Act. [
Footnote 5]
B
In
Parker v. Brown, 317 U. S. 341
(1943), the Court held that the Sherman Act does not apply "to the
anticompetitive conduct of a State acting through its legislature."
Hallie v. Eau Claire, 471 U. S. 34,
471 U. S. 38
(1985).
Parker v. Brown rests on principles of federalism
and state sovereignty. Under those principles, "an unexpressed
purpose to nullify a state's control over its officers and agents
is not lightly to be attributed to Congress."
Parker v.
Brown, 317 U.S. at
317 U. S. 351.
At the same time,
"a state does not give immunity to those who violate the Sherman
Act by authorizing them to violate it, or by declaring that their
action is lawful."
Ibid. Our decisions have established a two-part test
for determining immunity under
Parker v. Brown.
"First, the challenged restraint must be 'one clearly
articulated and affirmatively expressed as state policy;' second,
the policy must be 'actively supervised' by the State itself."
California Retail Liquor Dealers Assn. v. Midcal Aluminum,
Inc., supra, at
479 U. S. 105
(quoting
Lafayette v. Louisiana Power
& Light Co.,
Page 479 U. S. 344
435 U. S. 389,
435 U. S. 410
(1978) (plurality opinion)). New York's liquor pricing system meets
the first requirement. The state legislature clearly has adopted a
policy of resale price maintenance. Just as clearly, however, New
York's liquor pricing system is not actively supervised by the
State. As in
Midcal, the State "simply authorizes price
setting and enforces the prices established by private parties."
[
Footnote 6] 445
Page 479 U. S. 345
U.S. at
445 U. S. 105.
New York "neither establishes prices nor reviews the reasonableness
of the price schedules."
Ibid. New York "does not monitor
market conditions or engage in any "pointed reexamination" of the
program."
Id. at
445 U. S. 106
(quoting
Bates v. State Bar of Arizona, 433 U.
S. 350,
433 U. S. 362
(1977)). [
Footnote 7] Each
wholesaler sets its own "posted" prices; the State does not control
month-to-month variations in posted prices. Nor does the State
supervise the wholesaler's decision to "post off," the amount of
the "post off," the corresponding decrease, if any, in the bottle
price, or the frequency with which a wholesaler posts off. The
State has displaced competition among liquor retailers without
substituting an adequate system of regulation.
"The national policy in favor of competition cannot be thwarted
by casting such a gauzy cloak of state involvement over what is
essentially a private price-fixing arrangement."
445 U.S. at
445 U. S. 106.
[
Footnote 8]
Page 479 U. S. 346
III
Section 2 of the Twenty-first Amendment reserves to the States
the power to regulate, or prohibit entirely, the transportation or
importation of intoxicating liquor within their borders. [
Footnote 9] Section 2
"grants the States virtually complete control over whether to
permit importation or sale of liquor and how to structure the
liquor distribution system."
Midcal, 445 U.S. at
445 U. S. 110.
The States' Twenty-first Amendment powers, though broad, are
circumscribed by other provisions of the Constitution.
See
Larkin v. Grendel's Den, Inc., 459 U.
S. 116,
459 U. S. 122,
n. 5 (1982) (Establishment Clause);
Craig v. Boren,
429 U. S. 190,
429 U. S.
204-209 (1976) (Equal Protection Clause);
Wisconsin
v. Constantineau, 400 U. S. 433,
400 U. S. 436
(1971) (procedural due process);
Department of Revenue v. James
Beam Co., 377 U. S. 341,
377 U. S.
345-346 (1964) (Export-Import Clause). Although § 2
directly qualifies the federal commerce power, the Court has
rejected the view
"that the Twenty-first Amendment has somehow operated to
'repeal' the Commerce Clause wherever regulation of intoxicating
liquors is concerned."
Hostetter v. Idlewild Liquor Corp., 377 U.
S. 324,
377 U. S.
331-332 (1964). [
Footnote 10] Instead, the Court has engaged
Page 479 U. S. 347
in a "pragmatic effort to harmonize state and federal powers."
Midcal, supra, at
445 U. S. 109. The question in each case is
"whether the interests implicated by a state regulation are so
closely related to the powers reserved by the Twenty-first
Amendment that the regulation may prevail, notwithstanding that its
requirements directly conflict with express federal policies."
Capital Cities Cable, Inc. v. Crisp, 467 U.
S. 691,
467 U. S. 714
(1984).
Page 479 U. S. 348
A
The New York Court of Appeals concluded that § 101-bb
"was expressly designed to preserve competition in New York's
retail liquor industry by stabilizing the retail market and
protecting the economic position of small liquor retailers."
J.A.J. Liquor Store, Inc. v. New York State Liquor
Authority, 64 N.Y.2d at 520, 479 N.E.2d at 788. The Court of
Appeals traced the recent history of the State's regulation of
retail liquor prices. In early 1964, the Moreland Commission
completed an extensive study of the state laws governing the sale
and distribution of alcoholic beverages. New York State Moreland
Comm'n on the Alcoholic Beverage Control Law, Report and
Recommendations Nos. 1-3 (1964).
"The Commission's major findings were that New York consumers
suffered from serious price discrimination when compared to liquor
consumers in other States, and that a severe lack of competition
existed in the New York retail market."
J.A.J. Liquor Store, Inc. v. New York State Liquor
Authority, supra, at 519, 479 N.E.2d at 787. The New York
Legislature responded in 1964 by enacting sweeping changes in the
ABC Law primarily intended to promote price competition among
liquor retailers.
Ibid. The 1964 version of § 101-bb
prohibited retail sales below cost, and defined cost as the bottle
price in effect when the retailer sells or offers to sell the item.
ABC Law § 101-bb (McKinney 1970). During the years between 1964 and
1971, the number of liquor stores in New York declined. The State
Senate Excise Committee investigated the decline and concluded that
"the mass of small retailers are unable to compete with the large
volume outlets that have emerged." New York State Legislature,
Senate Excise Committee, Final Report 29-30 (Mar. 5, 1971). In
1971, the legislature enacted the current version of ABC Law §
101-bb to "protec[t] the economic position of small liquor
retailers."
J.A.J. Liquor Store, Inc. v. New York State Liquor
Authority, supra, at 520, 479 N.E.2d at 788.
Page 479 U. S. 349
We agree with the New York Court of Appeals that the purpose of
the 12-percent minimum markup is to protect small retailers. We
have noted that the 12-percent markup is imposed on the "posted
bottle price," a price that may differ from the actual wholesale
price paid by the retailer.
See supra, at
479 U. S.
339-340. There is no indication in the statute or its
legislative history, however, that the purpose of defining cost as
"posted bottle price" was to protect small retailers. The New York
Legislature first defined cost in terms of posted bottle price in
the 1964 amendments to the ABC Law. The purpose of those
amendments, as the New York Court of Appeals found, was to increase
price competition among liquor retailers. The 1971 amendments
simply retained bottle price as the basis of the statutory
definition of cost and added 12 percent to reflect the retailer's
overhead and operating expenses. Indeed, the legislative Committee
that considered the 1971 amendments concluded that the bottle price
definition of cost put small retailers at a slight disadvantage.
The Committee noted that
"[t]he present definition of 'cost' [as] scheduled bottle cost
to the retailer does afford some margin of profit to large
retailers in particular, and, to a lesser extent, to all retailers
who can afford to buy by the case."
New York State Senate Excise Committee, Final Report,
supra, at 8-9. The Committee suggested that
"consideration be accorded to . . . [r]evision or elimination of
. . . 'post offs' practices that appear to afford discriminatory
advantages to possession of great purchasing power."
Id. at 41. The Committee did not recommend an amendment
to this effect, because it considered the matter "outside the scope
of the directive given to this Committee."
Ibid. [
Footnote 11]
Page 479 U. S. 350
In
Midcal, we found nothing in the record to suggest
that California's wine pricing system actually helped sustain small
retailers. 445 U.S. at
445 U. S. 113.
Similarly, in this case, the New York Court of Appeals cited no
legislative or other findings that either the minimum markup
requirement or the "bottle price" definition of cost has been
effective in preserving small retail establishments, and made no
findings of its own. Our
Midcal opinion cites evidence
that States with "fair trade laws" not unlike ABC Law § 101-bb
actually had higher rates of firm failure, and slower rates of
growth of small retail stores, than free trade States in the years
between 1956 and 1972. 445 U.S. at
445 U. S. 113
(citing S.Rep.No. 94-466, p. 3 (1975)). The only relevant evidence
in the record indicates that the number of retail liquor outlets in
New York continued to decline between 1970 and 1979. App. to Juris
Statement 99A. We are unwilling to assume on the basis of this
record that § 101-bb has the effect of protecting small
retailers.
In this case, as in
Midcal, the State's unsubstantiated
interest in protecting small retailers "simply [is] not of the same
stature as the goals of the Sherman Act." 445 U.S. at
445 U. S. 114.
New York's resale price maintenance system directly conflicts with
the "familiar and substantial" federal interest in enforcement of
the antitrust laws.
Id. at
445 U. S.
110.
"Antitrust laws in general, and the Sherman Act in particular .
. . are as important to the preservation of economic freedom and
our free enterprise system as the Bill of Rights is to the
protection of our fundamental personal freedoms."
United States v. Topco Associates, Inc., 405 U.
S. 596,
405 U. S. 610
(1972). We therefore conclude that the State's asserted interest
in
Page 479 U. S. 351
protecting small retailers does not suffice to afford immunity
from the Sherman Act. [
Footnote
12]
B
Appellees finally argue that § 101-bb furthers the State's
interest in promoting temperance. Brief for Appellees 39-44. One
would hardly suggest that the New York Legislature set out to
promote temperance by increasing the number of retail outlets for
liquor. Rather, appellees argue that New York's pricing system has
the effect of raising retail prices, and that higher prices
decrease consumption of liquor. The New York Court of Appeals did
not find that the statute was intended to promote temperance, or
that it does so. On the contrary, that court cited the conclusion
of the Moreland Commission that higher prices do not decrease
consumption of liquor.
J.A.J. Liquor Store, Inc. v. New York
State Liquor Authority, 64 N.Y.2d at 521, n. 2, 479 N.E.2d at
788, n. 2 (citing Moreland Comm'n Report No. 1, at 3, 17). Of
course, we are not bound by findings of the Court of Appeals that
undercut powers reserved by the Twenty-first Amendment.
Midcal,
supra, at
445 U. S. 111;
Hooven & Allison Co. v. Evatt, 324 U.
S. 652,
324 U. S. 659
(1945). We nevertheless accord "great weight to the views of the
State's highest court" on state law matters,
Indiana ex rel.
Anderson v. Brand, 303 U. S. 95,
303 U. S. 100
(1938), and customarily accept the factual findings of state courts
in the absence of exceptional circumstances.
Midcal,
supra, at
445 U. S.
111-112. Our review of the record discloses no such
exceptional circumstances in this case. [
Footnote 13] We therefore do not reach the question
whether New
Page 479 U. S. 352
York's liquor pricing system could be upheld as an exercise of
the State's power to promote temperance.
IV
We conclude that the Twenty-first Amendment provides no immunity
for New York's authorization of private, unsupervised price-fixing
by liquor wholesalers. We therefore reverse the judgment of the New
York Court of Appeals and remand the case for further proceedings
not inconsistent with this opinion.
It is so ordered.
[
Footnote 1]
Section 101-b(3)(b) provides, in part:
"No brand of liquor or wine shall be sold to or purchased by a
retailer unless a schedule, as provided by this section, is filed
with the liquor authority, and is then in effect. Such schedule
shall be in writing duly verified, and filed in the number of
copies and form as required by the authority, and shall contain,
with respect to each item, the exact brand or trade name, capacity
of package, nature of contents, age and proof where stated on the
label, the number of bottles contained in each case, the bottle and
case price to retailers, the net bottle and case price paid by the
seller, which prices, in each instance, shall be individual for
each item and not in 'combination' with any other item, the
discounts for quantity, if any, and the discounts for time of
payment, if any. Such brand of liquor or wine shall not be sold to
retailers except at the price and discounts then in effect unless
prior written permission of the authority is granted for good cause
shown and for reasons not inconsistent with the purpose of this
chapter. Such schedule shall be filed by each manufacturer selling
such brand to retailers and by each wholesaler selling such brand
to retailers."
[
Footnote 2]
Rule 16.4(e), 9 NYCRR § 65.4(e) (1980), provides:
"For each item of liquor listed in the schedule of liquor prices
to retailers there shall be posted a bottle and a case price. The
bottle price multiplied by number of containers in the case must
exceed the case price by approximately $1.92 for any case of 48 or
fewer containers. The figure is to be reached by adding $1.92 to
the case price, dividing by the number of containers in the case,
and rounding to the nearest cent. Where more than 48 containers are
packed in a case, bottle price shall be computed by dividing the
case price by the number of containers in the case, rounding to the
nearest cent, and adding one cent. Variations will not be permitted
without approval of the authority."
[
Footnote 3]
Section 101-bb(2) provides, in part:
"No licensee authorized to sell liquor at retail for
off-premises consumption shall sell, offer to sell, solicit an
order for or advertise any item of liquor at a price which is less
than cost. As used in this section, the term:"
"
* * * *"
"(b) 'cost' shall mean the price of such item of liquor to the
retailer plus twelve percentum of such price, which is declared as
a matter of legislative determination to represent the average
minimum overhead necessarily incurred in connection with the sale
by the retailer of such item of liquor. As used in this paragraph
(b) the term 'price' shall mean the bottle price to retailers,
before any discounts, contained in the applicable schedule filed
with the liquor authority pursuant to section one hundred one-b of
this chapter by a manufacturer or wholesaler from whom the retailer
purchases liquor and which is in effect at the time the retailer
sells or offers to sell such item of liquor; except, that where no
applicable schedule is in effect the bottle price of the item of
liquor shall be computed as the appropriate fraction of the case
price of such item, before any discounts, most recently invoiced to
the retailer."
[
Footnote 4]
Bulletin 471 provides, in part:
"Case prices may be posted off for any given month, or months,
without an accompanying reduction in bottle prices. The wholesaler
is given these choices during the period of a post-off:"
"1. May elect not to reduce the bottle price, in which case the
legal bottle price will be the base for the 12% retail
mark-up."
"2. May reduce the bottle price to conform with the post-off
case price, consistent with Rule 16.4(e), in which case the reduced
bottle price will be the base for the 12% mark-up."
"3. May adopt a bottle price any where between the extremes
authorized under '1' and '2' above, in which case the reduced
bottle price will be the base for the 12% mark-up."
"
* * * *"
"Wholesalers of liquor will note that pursuant to these changes
no control is placed on the number of consecutive months during
which post-offs may be scheduled."
[
Footnote 5]
The Court of Appeals suggested that the liquor pricing system
prevents
"temporary price reductions . . . threatening to drive small
retailers out of business and consolidating control of the market
in the hands of a relatively few mass distributors who could then
dictate prices to the ultimate injury of consumers. . . ."
J.A.J. Liquor Store, Inc. v. New York State Liquor
Authority, 64 N.Y.2d 504, 520, 479 N.E.2d 779, 788 (1985). In
Matsushita Electric Industrial Co. v. Zenith Radio Corp.,
475 U. S. 574
(1986), we recognized that predatory pricing schemes are "rarely
tried, and even more rarely successful."
Id. at
475 U. S. 589.
In this case, the possibility of success is practically
nonexistent, because liquor retailers are limited to a single
outlet. ABC Law § 63.5 (McKinney 1970). In any event, § 101-bb
forbids not only predatory pricing, but all price competition among
retailers.
[
Footnote 6]
A simple "minimum markup" statute requiring retailers to charge
112 percent of their actual wholesale cost may satisfy the "active
supervision" requirement, and so be exempt from the antitrust laws
under
Parker v. Brown, 317 U. S. 341
(1943).
See Morgan v. Division of Liquor Control, Conn. Dept.
of Business Regulation, 664 F.2d 353 (CA2 1981) (upholding a
simple markup statute). Section 101-bb, however, is not a simple
minimum markup statute, because it imposes a markup on the "posted
bottle price," a price that may greatly exceed what the retailer
actually paid for the liquor. As we have explained,
supra,
at 339-340, Bulletin 471 permits wholesalers to reduce the case
price -- the price actually paid by most retailers -- without
reducing the bottle price. The New York Court of Appeals expressly
held that Bulletin 471 "Is consistent with Alcoholic Beverage
Control Law § 101-b(3), which does not mandate any price ratio
between scheduled case and bottle prices."
J.A.J. Liquor Store,
Inc. v. New York State Liquor Authority, supra, at 523, 479
N.E.2d at 790. We may not "construe a state statute contrary to the
construction given it by the highest court of a State."
O'Brien
v. Skinner, 414 U. S. 524,
414 U. S. 531
(1974). Appellees nevertheless argue that invalidation of Bulletin
471 does not require invalidation of § 101-bb. Appellees contend
that § 101-bb does not prevent the SLA from establishing a
relationship between case price and bottle price; indeed, Rule
16.4(e) establishes such a relationship. Brief for Appellees 24-25,
n. 37. Invalidation of Bulletin 471 alone, however, would not
prevent wholesalers from selling large quantities at low prices in
one month, and then requiring retailers to charge abnormally high
markups by raising bottle prices in subsequent months.
See
supra at
479 U. S. 340.
We cannot accept appellees' suggestion that such unsupervised
price-fixing should be tolerated as a reasonable accounting method
or as a hedge against inflation.
See App. to Juris.
Statement 101A (advertising a guaranteed 31.3 percent markup on
liquor purchased in August, 1984, and sold in September, 1984). We
thus have no occasion to consider whether a simple minimum markup
statute would be entitled to antitrust immunity under
Parker v.
Brown.
Some States completely control the distribution of liquor within
their boundaries.
E.g., Va.Code §§ 4-15, 4-28 (1983). Such
comprehensive regulation is immune under
Parker v. Brown,
because the State substitutes its own power for "unfettered
business freedom."
See New Motor Vehicle Bd. of Cal. v. Orrin
W. Fox Co., 439 U. S. 96,
439 U. S. 109
(1978).
[
Footnote 7]
In a concurring opinion, Judge Jasen argued that the State
actively supervises the liquor pricing system.
J.A.J. Liquor
Store, Inc. v. New York State Liquor Authority, supra, at
526-529, 479 N.E.2d at 792-794. Judge Jasen noted that the SLA can
respond to market conditions by permitting individual wholesalers
to depart from their posted prices, ABC Law § 101-b(3)(b), and by
permitting individual retailers to sell below the statutory
definition of "cost," § 101-bb(3), "for good cause shown." Bulletin
471 itself was issued by the SLA in response to market conditions.
Moreover, the state legislature frequently considers proposals to
alter the liquor pricing system. Neither the "monitoring" by the
SLA nor the periodic reexaminations by the state legislature exerts
any significant control over retail liquor prices or markups. Thus,
the State's involvement does not satisfy the second requirement of
Midcal.
[
Footnote 8]
The same considerations lead us to reject appellees' contention
that there is no "contract, combination . . . , or conspiracy, in
restraint of trade." 15 U.S.C. § 1. Where "private actors are . . .
granted
a degree of private regulatory power' . . . the
regulatory scheme may be attacked under § 1" as a "hybrid"
restraint. Fisher v. Berkeley, 475 U.
S. 260, 475 U. S. 268
(1986) (quoting Rice v. Norman Williams Co., 458 U.
S. 654, 458 U. S. 666,
n. 1 (1982) (STEVENS, J., concurring in judgment)). See
Schwegmann Bros. v. Calvert Distillers Corp., 341 U.
S. 384 (1951). Our decisions reflect the principle that
the federal antitrust laws preempt state laws authorizing or
compelling private parties to engage in anticompetitive behavior.
See also Northern Securities Co. v. United States,
193 U. S. 197,
193 U. S.
345-346 (1904) (plurality opinion); 1 P. Areeda & D.
Turner, Antitrust Law � 209, pp. 60-62 (1978). That principle
squarely governs this case.
[
Footnote 9]
Section 2 of the Twenty-first Amendment provides:
"The transportation or importation into any State, Territory, or
possession of the United States for delivery or use therein of
intoxicating liquors, in violation of the laws thereof, is hereby
prohibited."
[
Footnote 10]
The dissenting opinion concedes that "neither the House of
Representatives nor the state ratifying conventions deliberated
long on the powers conferred on the States by § 2."
Post
at
479 U. S. 353.
It nevertheless maintains that the Senate debates "clearly
demonstrate an intent to confer on States complete and exclusive
control over the commerce of liquor."
Post at
479 U. S. 354.
We find no such clear demonstration of congressional intent. It is
true that Senator Blaine, the Senate sponsor of the Amendment, at
one point stated that the purpose of § 2 was "to restore to the
States . . . absolute control in effect over interstate commerce
affecting intoxicating liquors. . . ." 76 Cong. Rec. 4143 (1933).
At another point, however, Senator Blaine appeared to advance a
narrower interpretation:
"So, to assure the so-called dry States against the importation
of intoxicating liquor into those States, it is proposed to write
permanently into the Constitution a prohibition along that
line."
Id. at 4141.
The dissent also maintains that the behavior of the States
following ratification supports the view that States have power to
enact laws governing the pricing of liquor free of the strictures
of federal antitrust policy. One commentator is quoted as saying
that the States adopted "
bold and drastic experiments'" in
price control. Post at 479 U. S. 357,
quoting De Ganahl, Trade Practice and Price Control in the
Alcoholic Beverage Industry, 7 Law & Contemp. Prob. 665, 680
(1940). In the next paragraph, however, this writer states
that
"[b]ecause the experiments came at a time when neither the fair
trade law nor the constitutional law on liquor was settled . . .
there is uncertainty as to the validity of much of this
legislation."
Ibid. When the Twenty-first Amendment was adopted, it
was far from clear that the federal commerce power extended to
intrastate retail sales of liquor.
See A. L. A. Schechter
Poultry Corp. v. United States, 295 U.
S. 495,
295 U. S.
542-548 (1935) (holding that the commerce power does not
extend to intrastate sales of poultry, even when the poultry has
been shipped across state lines). The Miller-Tydings Fair Trade Act
of 1937, 50 Stat. 693, moreover, permitted States to authorize
agreements prescribing prices for the resale of specified
commodities, including liquor. Even after the passage of the
Miller-Tydings Act, price control laws were not as universally
popular as the dissent implies. In 1940, for example, only 18 of
the 45 "wet" States had price stabilization provisions written into
their alcoholic beverage statutes, De Ganahl,
supra, at
680, while, in 17 States, the State itself monopolized sales of
liquor, Shipman, State Administrative Machinery for Liquor Control,
7 Law & Contemp. Prob. 600, 601, n. 5 (1940).
[
Footnote 11]
There is no indication that the purpose of Bulletin 471 is to
protect small retailers. The Bulletin states that its purpose is to
prevent "a situation during post-off periods which resulted in what
became known as a
two bottle' price." App. to Juris. Statement
71A. Although there is no precise explanation of "two bottle
pricing" in the record, the caption of Bulletin 471 is "Unlawful
Discrimination and Price Scheduling -- Bottle Price During
Post-Down." Ibid. This suggests that the SLA was concerned
with ensuring that wholesalers charge the same price to all
retailers, and not with the relationship between the retailer's
actual cost and the required markup.
[
Footnote 12]
We have no occasion in this case to consider whether the State's
interest in protecting small retailers ever could prevail against
the federal interest in enforcement of the antitrust laws.
[
Footnote 13]
It is far from certain that the New York Legislature intended to
promote temperance, or that the retail price maintenance system
actually decreases consumption. Section 101-bb, like other sections
of the ABC Law, recites that it is enacted "for the purpose of
fostering and promoting temperance." ABC Law § 101-bb(1) (McKinney
1970). This statement is not supported by specific findings, or by
evidence in the record. In
Midcal, we accepted the
California Supreme Court's rejection of a similar declaration of
legislative purpose. 445 U.S. at
445 U. S.
112-114 (discussing
Rice v. Alcoholic Beverage
Control Appeals Bd., 21 Cal. 3d
431, 457-459, 579 P.2d 476, 493-494 (1978)). The legislative
Report accompanying § 101-bb does not suggest that the amendment
was aimed at decreasing consumption. Rather, the Report focuses on
the need to protect small retailers. New York State Legislature,
Senate Excise Committee, Final Report 30, 37 (Mar. 1971). The
Report does express concern over the increase in liquor consumption
during the years between 1964 and 1971.
Id. at 16. But the
Report recognizes the Moreland Commission's finding that higher
prices do not reduce consumption, and states that
"because of the multiplicity of factors involved and lack of
data on specifics, the Committee is unable to determine what
portion of such increase is attributable to any particular
factors."
Id. at 14.
JUSTICE O'CONNOR, with whom THE CHIEF JUSTICE joins,
dissenting.
Immediately after the ratification of the Twenty-first
Amendment, this Court recognized that the broad language of § 2 of
the Amendment conferred plenary power on the States to regulate the
liquor trade within their boundaries.
Ziffrin, Inc. v.
Reeves, 308 U. S. 132
(1939);
Finch & Co. v. McKittrick, 305 U.
S. 395 (1939);
Indianapolis Brewing Co. v. Liquor
Control Comm'n, 305 U. S. 391
(1939);
State Board of Equalization v. Young's Market Co.,
299 U. S. 59
(1936). As JUSTICE STEVENS recently observed, however, the Court
has, over the years, so "completely distorted the Twenty-first
Page 479 U. S. 353
Amendment" that "[i]t now has a barely discernible effect in
Commerce Clause cases."
Newport v. Iacobucci, ante, at
479 U. S. 98
(dissenting). Because I believe that the Twenty-first Amendment
clearly authorized the State of New York to regulate the liquor
trade within its borders free of federal interference, I dissent
from Part III of the Court's opinion, and would affirm the judgment
of the New York Court of Appeals.
I
In
Hostetter v. Idlewild Liquor Corp., 377 U.
S. 324 (1964), this Court took a first step toward
eviscerating the authority of States to regulate the commerce of
liquor. The Court held that the State of New York could not
regulate the importation of liquor into that State when the liquor
was sold in duty-free shops at the Kennedy Airport. The basis for
this decision was the fact that the United States Customs Service
already supervised the liquor sold at the airport. Justice Black,
who as a Senator was present at the creation of the Twenty-first
Amendment, wrote a thoughtful and powerful dissent. After reviewing
the legislative history of the Twenty-first Amendment, Justice
Black concluded that the Senators who approved the Twenty-first
Amendment thought they were returning absolute control over the
liquor industry to the States, and
"were seeing to it that the Federal Government could not
interfere with or restrict the State's exercise of the power
conferred by the Amendment."
Id. at
377 U. S. 338
(dissenting). Because the Court has seen fit in recent years to
dismiss this legislative history without analysis as "obscure,"
Bacchus Imports, Ltd. v. Dias, 468 U.
S. 263,
468 U. S. 274
(1984);
ante at
479 U. S.
346-347, n. 10, a fresh examination of the origins of
the Twenty-first Amendment is in order and long overdue.
Although neither the House of Representatives nor the state
ratifying conventions deliberated long on the powers conferred on
the States by § 2,
but see 76 Cong. Rec. 2776 (1933)
(statement of Rep. Lea of California that the section was "the
Page 479 U. S. 354
extreme of State rights" because it obligated the Federal
Government to assist the enforcement of state laws "however unwise
or improvident"), the Senate considered the section in great
detail. Those Senate discussions clearly demonstrate an intent to
confer on States complete and exclusive control over the commerce
of liquor.
When the Senate began its deliberations on the Twenty-first
Amendment, the proposed Amendment included a § 3 not present in the
adopted Amendment. This section granted the Federal Government
concurrent authority over some limited aspects of the commerce of
liquor. It provided that "Congress shall have concurrent power to
regulate or prohibit the sale of intoxicating liquors to be drunk
on the premises where sold."
Id. at 4138. As Justice Black
observed, the proposal
"to leave even this remnant of federal control over liquor
traffic gave rise to the only real controversy over the language of
the proposed Amendment."
377 U.S. at
377 U. S. 337.
Even Senator Blaine, the Chairman of the Senate Subcommittee that
had held hearings on the proposed Amendment, opposed the limited
grant of authority to the Federal Government in § 3. According to
Senator Blaine, when the Federal Government was organized by the
Constitution, the States had "surrendered control over and
regulation of interstate commerce." 76 Cong. Rec. 4141 (1933). He
viewed § 2 of the Amendment as a restoration of the power
surrendered by the States when they joined the Union. Section 2
"restor[ed] to the States, in effect, the right to regulate
commerce respecting a single commodity -- namely, intoxicating
liquor."
Ibid. In his view, the grant of authority to
Congress in § 3 undercut the import of § 2:
"Mr. President, my own personal viewpoint upon section 3 is that
it is contrary to section 2 of the resolution. I am now endeavoring
to give my personal views. The purpose of section 2 is to restore
to the States by constitutional amendment absolute control in
effect over interstate commerce affecting intoxicating liquors
which
Page 479 U. S. 355
enter the confines of the States. The State under section 2 may
enact certain laws on intoxicating liquors, and section 2 at once
gives such laws effect. Thus, the States are granted larger power,
in effect, and are given greater protection, while, under section
3, the proposal is to take away from the States the powers that the
States would have in the absence of the eighteenth amendment."
Id. at 4143.
Senator Wagner was an especially vigorous opponent of the
proposed § 3. In his view, it failed to
"correct the central error of national prohibition. It does not
restore to the States responsibility for their local liquor
problems. It does not withdraw the Federal Government from the
field of local police regulation into which it has trespassed."
Id. at 4144. In Senator Wagner's view, the danger of §
3 was that even this limited grant of authority to the Federal
Government would result in federal control of the liquor trade:
"If Congress may regulate the sale of intoxicating liquors where
they are to be drunk on premises where sold, then we shall probably
see Congress attempt to declare during what hours such premises may
be open, where they shall be located, how they shall be operated,
the sex and age of the purchasers, the price at which the beverages
are to be sold. . . ."
"
* * * *"
"It is entirely conceivable that, in order to protect such a
prohibition, the courts might sustain the prohibition or regulation
of all sales of beverages, whether intended to be drunk on the
premises or not. And if sales may be regulated, so may
transportation and manufacture. . . . If that is to be the history
of the proposed amendment -- and there is every reason to expect it
-- then obviously we have expelled the system of national control
through the front door of section 1 and readmitted it forthwith
through the back door of section 3."
Id. at 4147.
Page 479 U. S. 356
Other Senators also expressed the fear that
"any grant of power to the Federal Government, even a seemingly
narrow one, could be used to whittle away the exclusive control
over liquor traffic given the States by Section 2."
Hostetter, 377 U.S. at
377 U. S. 337
(Black, J., dissenting);
see 76 Cong. Rec. 4143 (1933)
(Sen. Blaine);
id. at 4177-4178 (Sen. Black). Still others
emphasized the plenary power granted the States by § 2. Senator
Walsh, a member of the Subcommittee that had held hearings on the
Amendment, said:
"The purpose of the provision in the resolution reported by the
committee was to make the intoxicating liquor subject to the laws
of the State once it passed the State line and before it gets into
the hands of the consignee, as well as thereafter."
Id. at 4219. In response to a question from Senator
Swanson, Senator Robinson of Arkansas affirmed that
"it is left entirely to the States to determine in what manner
intoxicating liquors shall be sold or used and to what places such
liquors may be transported."
Id. at 4225. Thus, upon the motion of Senator Robinson,
the Senate voted to strike § 3 from the proposed Amendment.
Id. at 4179.
By emphasizing the importance of the plenary powers granted the
States in § 2, and more importantly by removing even the limited
grant of authority to Congress contained in § 3, the Senate made
manifest its intent to prevent any federal interference with state
attempts to regulate the liquor trade. It is difficult to believe
that the Senators would have anticipated that a federal statute
enacted under the commerce power could ever override the State's
power to regulate the liquor trade.
II
The history of the Amendment strongly supports Justice Black's
view that the Twenty-first Amendment was intended to return
absolute control of the liquor trade to the States, and that the
Federal Government could not use its Commerce Clause powers to
interfere in any manner with the States' exercise of the power
conferred by the Amendment.
Page 479 U. S. 357
Given its desire to confer broad freedom on the States to
regulate commerce in intoxicating liquors without federal
interference, Congress certainly intended that the States have the
power to enact economic regulations governing the pricing of liquor
free of federal antitrust policy.
The behavior of the States upon the ratification of the
Twenty-first Amendment also supports this view. Contemporaneously
with the enactment of the Twenty-first Amendment, a report
sponsored by John D. Rockefeller, Jr., recommended that those
States that could not muster the political support for state
monopolies in the liquor industry should adopt the equivalent
solution of price control laws designed to keep the price of liquor
at high levels. R. Fosdick & A. Scott, Toward Liquor Control 52
(1933). According to this report, the "profit motive is the core of
the problem."
Id. at 61. This profit motive encouraged low
prices that stimulated liquor consumption.
Id. at 149.
Retail prices had a "direct bearing on the amount of consumption,"
id. at 81, and thus a State could use price-fixing powers
"as one of its most effective instruments of control."
Id.
at 82. The ideas expressed by the Rockefeller Report "were the
dominant ideas which took flesh in the post-repeal legislation of
the states." Dunsford, State Monopoly and Price-Fixing in Retail
Liquor Distribution, 1962 Wis.L.Rev. 454, 464. It is not
surprising, therefore, that, even before the enactment of the
Miller-Tydings Fair Trade Act of 1937, 50 Stat. 693, States
exercised their Twenty-first Amendment powers to adopt "bold and
drastic experiments in price control," including price posting,
regulation by private associations, and mandatory resale price
maintenance contracts. De Ganahl, Trade Practice and Price Control
in the Alcoholic Beverage Industry, 7 Law & Contemp. Prob. 665,
680 (1940). Thus, the States that ratified the Twenty-first
Amendment immediately exercised the authority granted them by § 2
of that Amendment to enact the very type of statute that this Court
strikes down today.
Page 479 U. S. 358
With the clear legislative intent to free state regulation of
liquor from federal interference, and the immediate enactment of
price control laws by the ratifying States, the better view of the
proper resolution of any apparent conflict between the Sherman Act
and a state regulation of the liquor trade was expressed by Justice
Frankfurter in
United States v. Frankfort Distilleries,
Inc., 324 U. S. 293,
324 U. S.
300-302 (1945) (concurring). In Justice Frankfurter's
view, the Twenty-first Amendment accorded States the power to
control the liquor traffic
"according to their notions of policy freed from the
restrictions upon state power which the Commerce Clause implies as
to ordinary articles of commerce."
Id. at
324 U. S. 300.
Because Congress enacted the Sherman Act pursuant to its authority
in the Commerce Clause, the Sherman Act must yield to state power
drawn from the Twenty-first Amendment.
Id. at
324 U. S. 301.
Thus, Justice Frankfurter concluded:
"If a State, for its own sufficient reasons, deems it a
desirable policy to standardize the price of liquor within its
borders either by a direct price-fixing statute or by permissive
sanction of such price-fixing in order to discourage the
temptations of cheap liquor due to cutthroat competition, the
Twenty-first Amendment gives it that power, and the Commerce Clause
does not gainsay it. Such state policy cannot offend the Sherman
Law, even though distillers or middlemen agree with local dealers
to respect this policy."
Ibid.
Justice Frankfurter believed that, in the absence of a conflict
between the state regulatory scheme and the federal antitrust laws,
federal antitrust policy was fully applicable even to the
intrastate liquor trade. In
Frankfort Distilleries itself,
the State had not authorized the anticompetitive conduct of the
respondents. Once a State has exercised its § 2 power, however,
"the Sherman Law could not override such exercise of state power."
Id. at
324 U. S.
302.
Page 479 U. S. 359
Justice Frankfurter was not alone in this view. In repealing the
Miller-Tydings Act -- which had authorized States to enact fair
trade laws -- the Senate believed that the States could continue to
impose retail price maintenance on liquor retailers. The Report
from the Senate Judiciary Committee on the proposal to repeal the
Miller-Tydings Act explicitly assured the Senate that the repeal
would not change the power of States to impose retail price
maintenance on liquor retailers pursuant to the authority granted
the States by the Twenty-first Amendment:
"Liquor will not be affected by the repeal of the fair trade
laws in the same manner as other products because the Twenty-First
Amendment to the Constitution gives the States broad powers over
the sale of alcoholic beverages. Thus, while repeal of the fair
trade laws generally will prohibit manufacturers from enforcing
resale prices, alcohol manufacturers may do such in States which
pass price-fixing statutes pursuant to the Twenty-First
Amendment."
S.Rep. No. 94-466, p. 2 (1975).
The history and purpose of the Twenty-first Amendment are a
compelling indication of an intent to confer on States the power to
regulate trade in liquor. Despite this clear intent, the Court in
recent years has used a balancing test to resolve conflicts between
federal statutes and state laws enacted pursuant to § 2. In
California Retail Liquor Dealers Assn. v. Midcal Aluminum,
Inc., 445 U. S. 97
(1980), and once again today, the Court ventured still further from
the intent of the Twenty-first Amendment by adopting an
unprecedented test that focuses on the wisdom of the State's
exercise of its § 2 powers. For the Court today does not invalidate
the ABC Law because
Page 479 U. S. 360
it involves an exercise of power outside the scope of the
Twenty-first Amendment -- indeed, the Court could not do so, given
the long history of the use of price controls by state liquor
authorities. Instead, in a manner reminiscent of the
long-repudiated
Lochner v. New York, 198 U. S.
45 (1905), the Court strikes down the ABC Law because it
concludes that the law was not "effective" in preserving small
retail establishments or in decreasing alcohol consumption. The
proper inquiry, however, is not whether the State of New York chose
wisely in enacting a retail price maintenance law, nor whether the
State of New York's motivation in doing so was linked to a "central
purpos[e]" of the Twenty-first Amendment. The sole "question is
whether the provision in this case is an exercise of a power
expressly conferred upon the States by the Constitution."
Bacchus Imports, Ltd. v. Dias, 468 U.S. at
468 U. S. 287
(STEVENS, J., dissenting).
Because the State of New York was plainly exercising its § 2
power to regulate liquor trade, I respectfully dissent.