Supreme court judges 'openly sceptical' on interstate shipping laws

  • Wednesday 8 December 2004

After an hour-long Washington hearing on Tuesday, the US Supreme Court began considering a ruling that could revolutionise America’s wine buying and selling.

Justices openly expressed scepticism about New York and Michigan laws preventing consumers from buying wine directly from out-of-state wineries by Internet and phone.

They seemed to voice doubts about the constitutionality of the laws, which prohibit direct interstate shipments while allowing in-state producers to send their bottles to in-state consumers.

Solicitors general of both states argued that the Constitution’s 21st Amendment, empowering states to regulate the importation of alcoholic beverages, authorised them to block direct shipments. ‘Mere protectionism is permitted’ by the amendment, which repealed Prohibition, Michigan argued.

Clint Bolick of the libertarian Institute for Justice, representing small producers, said the Constitution’s Commerce Clause, which enables Congress to regulate interstate commerce, barred states from protectionist discrimination favoring their own products.

Justices voiced reservations about the argument that anti-shipment laws in 24 states protected minors from alcohol and enabled the states to collect sales taxes; 26 states allow direct shipments.

States with bans require producers to sell to wholesalers, who sell to retailers - the three-tier system. A Federal Trade Commission study concluded that the bans reduced buyers’ choices and raises prices.

Wholesalers, major beneficiaries of the US$21. 6bn wine industry, have fought hard to prevent the many small producers among America’s 3,726 from entering the interstate market directly.

If the court says consumers can buy directly, retailers might do so.

A ruling is expected by June.

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