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Approve Malloy package store plan

Published March 04. 2012 4:00AM

Tipping the playing field by setting price points that interfere with the free market flow of commerce is never a good thing. In his proposal to allow alcohol sales on Sunday, Gov. Dannel P. Malloy is also seeking to reform a system that for too long has tolerated unfair competition.

The law now prohibits retailers from selling alcoholic beverages below cost. The Connecticut Package Stores Association has long defended this minimum pricing rule. They express fears that without minimum pricing they will not be able to compete with the large retailers - big-box stores, supermarkets and liquor outlets - who are better positioned to buy in bulk and discount prices than are the mom-and-pop package stores.

There is some truth in that. But it should not be the business of the state to try to rig the system in any business model's favor. Consumers ultimately benefit by unrestrained pricing competition.

It is an unfair characterization to suggest that package stores will have no ability to compete if minimum pricing ends. Many consumers will still opt for the personal service they receive at a small package store and pay a small premium in prices to get it. Independent small operators can also band together in buying consortiums to get pricing that approaches the larger competitors. And the governor is also asking the legislature to end rules that prohibit package stores from selling some snack foods, helping them attract more customers who will welcome one-stop shopping at the local "packy."

The administration recognizes that it faces a tough task in getting legislation approved over the objections of the package store association lobby. The trade group, which has long opposed Sunday sales, recently ended that opposition with the expectation of concessions in return.

And indeed, the governor has signaled a willingness to moderate the minimum pricing rules, rather than abandon them. The administration's revised proposal would limit the number of specials offered at below-cost prices and set a base price for any product at 10 percent below cost. While there may be no practical reason for this modified minimum pricing, there is a political motivation if Gov. Malloy expects to round up the votes he needs for passage.

In an effort to gain support, the governor also modified an original proposal that would have encouraged chain ownership, raising from two to nine the number of retail permits held by one entity. Gov. Malloy is now proposing ownership of no more than six stores. He had also proposed eliminating a limit of one package store per 2,500 residents of any municipality, creating a level of unlimited competition that existing store owners fear. His revised proposal would keep the limit of one store per 2,500 residents.

The governor cannot compromise much more without undermining his stated goal of bringing greater competition to the industry for the betterment of consumers.

"This has been a 100 percent protected and regulated industry and in so many ways, quite un-American," Gov. Malloy told reporters. "We need to put pressure on prices in Connecticut."

Here in southeastern Connecticut people are very aware that commerce does not end at the state borders. Sunday sales and more competitive pricing for alcoholic drinks will reduce the number of consumers crossing the border and keep that cash circulating in Connecticut.

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