Costco Wins Big

Costco Wholesale Corp. won a sweeping victory in federal court Friday, with a judge agreeing that a long list of state liquor control laws are illegal antitrust violations.

State officials said they had not decided whether to appeal the ruling. If it stands, the decision will dramatically alter the way beer wholesalers have conducted business in Washington state since the repeal of prohibition. It almost certainly will be followed by similar suites, and results, in other states across the country.

In her ruling, U.S. District Judge Marsha J. Pechman agreed with Costco that Washington’s mandatory price markups and other rules unfairly force large retailers to pay more for alcoholic beverages.

Pechman also said the regulations couldn’t be justified as a means to keep consumer prices higher and alcohol consumption down, and probably aren’t working anyway.

“Indeed, this policy would appear to increase consumption by making it less expensive for consumers to obtain beer and wine at the most convenient and easily accessible location,” Pechman wrote.

The state still could drive up prices by levying excise taxes, which wouldn’t run afoul of antitrust law, she wrote.

The judges ruling did maintain a single regulation: the state’s ban on one retailer selling alcohol to another, which the board said would “prevent Costco and other large retailers from acting as distributors in Washington.”

For a detailed commentary on the ramifications of this ruling for the craft beer industry, go to: