Mackinac Center asks for rule change that would lower prices for consumers
Your beer and wine costs more than it should because Michigan has anti-competitive rules that benefit wholesalers instead of consumers.
That's because of "post and hold" rules that mandate that alcohol wholesalers and manufacturers post price changes for beer and wine and then leave them in place for a specific amount of time, said Michael LaFaive, director or the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy.
Locking in prices allows companies to coordinate pricing with their so-called competition, he said.
Once prices are posted, they have to be held at that level for a specific amount of time. Prices on beer must be held steady for 180 days; three months for wine. Changes can only be made with permission from the Liquor Control Commission.
According to liquor law experts, post and hold laws were created to ensure that all businesses buy their alcohol at the same price. Quantity discounts are not allowed. Wholesalers have to sell their products to retailers at the same price. The idea is the smaller stores are protected from the bigger chains. But it leads to non-competitive pricing, according to a study done in 2014 at Columbia University.
Another study, done at George Mason University, found that post and hold laws can add up to $2.24 to the cost of a six pack of beer, and up to $1.10 for a bottle of wine.
"This is just one of many examples of Michigan’s archaic regulations that stifles competition, harms consumers and enriches wholesalers," LaFaive said in a press release. "It effectively imposes a form of government-facilitated price collusion."