Policy Group Opposes Michigan’s Beer and Wine Price ‘Collusion’

Published June 19, 2014

The Mackinac Center for Public Policy today asked the Michigan Liquor Control Commission to rescind Michigan’s “post and hold” rules that require alcohol wholesalers and manufacturers to post price changes for beer and wine and then leave them in place for a specified period of time. The request was made at the commission’s semi-annual public hearing in Southfield.

“This is just one of many examples of Michigan’s archaic regulations that stifles competition, harms consumers and enriches wholesalers,” said Michael D. LaFaive, director of the Center’s Morey Fiscal Policy Initiative. “It effectively imposes a form of government-facilitated price collusion.”

Under Michigan’s “post” rule, beer and wine manufacturers and wholesalers must inform the Michigan Liquor Control Commission of price changes, and the “hold” rule prohibits a price change for a period of time without a written order from the commission. The hold time is 180 days for beer and 90 days for wine.

Leads to Higher Prices

“The research shows that these rules increase the cost for consumers between 6.4 percent and 30 percent, depending on the product,” LaFaive said. “One study showed nationwide that post and hold rules add between 93 cents and $2.24 to the cost of a six-pack of beer and between 39 cents and $1.10 to a bottle of wine.”

The request to rescind the post and hold rules is just part of LaFaive’s larger body of work aimed at reforming Michigan’s liquor control laws, including eight specific recommendations he made to the Liquor Control Advisory Rules Committee.

“The liquor control code is set up to encourage crony capitalism and preserves special privileges for the select few who have amassed fortunes with the help of state government,” LaFaive said. “Wholesalers are a powerful special interest lobby that has delivered themselves all kinds of perks, including a vast regulatory regime and monopolized distribution territories.”

Source: Mackinac Center for Public Policy