Post-And-Hold: How Two Circuits Misapplied Antitrust State Action Doctrine and Curtailed State Liquor Regulators

Abstract

States regulate their liquor markets in a number of ways. One method is "post-and-hold" in which wholesalers post monthly price lists that the state shares with competitors, who may then match lower prices, after which all wholesalers must hold their prices for the next month. Two Circuit Courts of Appeal found that this system violates the antitrust laws, while one, the Second Circuit, found otherwise. In striking down post-and-hold, the Circuits found that it was a hybrid restraint, one in which the state grants a degree of regulatory power to private parties. However, in doing so, they relied on a line of cases which found that state liquor regulations with resale price maintenance provisions were hybrid restraints. Such laws do indeed confer a degree of private regulatory power, they enable a distributor to set the minimum price that a retailer can legally charge. In this way, the state gives the distributor a "club" which it may use against retailers. However, post-and-hold involves no such club. While post-and-hold is similar to the struck-down resale price maintenance provisions in that distributors set their own prices, those prices are not binding on any other party and as such the state does not confer private regulatory power on distributors. The Second Circuit was correct that post-and-hold does not violate the antitrust laws.