Antitrust Law and the Price of Beer We know that college students drink astonishing amounts of alcohol. Each year college students spend about $5.5 billion on alcohol, most of that on beer. That total exceeds what students spend on books, soda, coffee, juice, and milk combined. Could antitrust law affect the consumption, or at least the price, of beer? Perhaps. A group of consumers in Madison, Wisconsin, home of the University of Wisconsin, sued some local bars and the Madison-Dane County Tavern League, Inc., for price fixing. The plaintiffs claimed that the defendant bars had agreed to fix prices by adopting a “voluntary ban on drink specials.” The plaintiffs pointed to a September 2002 press release from the “Downtown Tavern Working Group” announcing that drink specials would not be offered after 8 PM on Friday and Saturday nights for “at least a year.” The defendants said the new policy was a self imposed effort to curb binge drinking, especially by students, and that the policy was a response to pressure from the city and the University of Wisconsin. Further, the defendants said that the press release did not reflect an agreement of any kind and thus could not violate the law because all bar owners remained free to do as they wished. Eventually, the Wisconsin Supreme Court held that the policy was immune from the antitrust laws because the city effectively compelled the arrangement. Given the state legislature’s broad grant of regulatory authority over alcohol to municipalities, the Court concluded that the legislature must have intended the defendant taverns’ actions to be exempt (immune from scrutiny) from the antitrust laws. Questions 1. The legality of this arrangement aside, should bar owners be free to reach an agreement eliminating drink specials? 2. Is the Madison dispute too trivial and frivolous to justify court time? Explain. 3. Will the market satisfactorily protect youthful drinkers and society? Explain. 4. a. How would you expect the Supreme Court decision to affect the consumption of beer in Madison? b. Explain how a “voluntary ban on drink specials” might constitute price fixing.
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