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No loss leaders at liquor stores, court rules

The Supreme Judicial Court today upheld a state commission's ruling to suspend a liquor chain's license for several days at two stores because it sold alcohol at costs lower than the invoice price it paid, in violation of state regulations.

The state's highest court acknowledged that Total Liquors did not actually take a loss on the liquor, because it had a rebate deal with the suppliers which ultimately reduced the chain's price per bottle to what it sold rum to the public.

But the law is the law and there's nothing wrong with a ruling by the state Alcoholic Beverages Control Commission that such rebates can't be used in determining retail prices if they're not included in the original invoices for the liquids, the court said.

In one case, Total rum sold a brand of rum at $17.99 per bottle at its Everett and Natick stores even though it had paid an invoice price of $19.79 a bottle. Several competitors promptly notified the commission, which ordered the chain to shut one of the stores for two days and the other for three days in penance.

Total argued - and a Superior Court judge agreed - that rebates negotiated before it bought the rum brought the price down to $17.99, and so the company was not actually taking a loss, which would violate state liquor regulations.

But the SJC justices said state law is pretty clear, that the retail price cannot be lower than the invoice price and that was not the case here. Should Total and its distributors figure out how to include future rebates in invoices, then that would be OK, the court ruled.

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Comments

Who in the world could possibly care if a wine or liquor store is selling product below its invoice cost? Why is this still a thing in Massachusetts?

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Voting closed 40

I agree with the state on the one, a rarity for liquor laws. Without this prohibition big chains could afford to undercut the independent packies and quickly put them out of business. Then theses conglomerates raise prices (not wages) and give even less of a shit about the neighborhood.

It's kinda nice liquor stores are independent in Massachusetts. This keeps it that way.

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Voting closed 24

then why don't we have similar laws for ALL retail establishments, and not just liquor stores?

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Voting closed 43

Liquor has always been tightly controlled. If books where just as controlled as booze, there would be more independent book stores.

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Voting closed 12

Right.

I've heard similar arguments in favor of maintaining Blue Law prohibitions against liquor sales on Thanksgiving and other holidays. Without them, small mom-and-pops would be force to either remain open on holidays, or forego a non-trivial portion of their overall annual sales.

This argument is floated as an alternative to the view that these laws are about temperance.

But...they are about temperance.

Otherwise, we'd see similar measures for all merchants.

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Voting closed 17

Lets have givaways of pot samples in the streets, just like soft drinks and energy drinks and yogurt.

Is that what you want?

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Voting closed 7

As long as the recipients are 21, what's your issue?

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Voting closed 9

I want to say yes, but I feel like this is a trap. . .

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Voting closed 9

Large conglomerates like Winn resorts? Haha oh right these rules don’t apply to them.

Sure it’s about protecting small businesses...

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Voting closed 12

When does this ever happen? Specifically, a chain losing money to drive out competition? Chains 'win' because they are more efficient, have lower costs, and can sell at a lower price. That last item is a good thing for customers.

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Voting closed 4

Never heard of John D. Rockefeller? Anti-trust laws? Yeah, he's dead, but the practice hardly ended with him.

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Voting closed 3

How did the competitors know the invoice price? Is it public information?

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Voting closed 18

Any packie owner who sees a lower shelf price than their own invoice will call their distributor to ask what's going on.

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Voting closed 20

So there's no such thing as price competition at the distributor level?

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Voting closed 7

My understanding is distributors publish their price lists each month and have to offer products under the same terms to every liquor store. There can be volume discounts, but they have to be the same for every store. So every store will know what the lowest cost possible for any bottle is. I am not familiar with the rebate system, though.

And to your general point, there is no direct price competition at the distributor level because every brand has a single distributor.

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Voting closed 4

Total does not have a store in Saugus, it was everett

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Voting closed 7

Thanks!

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Could this be the usual 10% off for cash ?? Some old Irishman once told me that one has to throw away 1/3rd of your cash disbursement receipts...alas, I now know what he meant.

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Voting closed 8