TheAgitator.com
Lie Down With Dogs…
Wednesday, March 31st, 2004In my booze paper, I included an item about anti-alcohol activists (under not-so-subtle threats of further action) having persuaded bar and taverns on a Madison, Wisconsin strip frequented by college students to cease with happy hours and drink specials for one year, to see if there might be a corresponding drop in alcohol-related crime. There wasn’t.
But now, students have launched a class action suit against bars on the strip, as well as the University of Wisconsin for price fixing and violations of state and federal anti-trust law.
On the one hand, it’s hard to feel sorry for bar and tavern owners who buckle and climb into bed with the enemy. On the other, the suspension of drink specials was brought on by a federally-funded program, heavily supported by the university’s chancellor and powerful politicians. You’re a bar owner. Do you really want to put yourself on these people’s shit list? Damned if you do…
I’d like to see the class action name the federal government, too, since it was the feds’ operation “PACE” that came up with the scheme to begin with. But I’m guessing some interpretation of sovereign immunity will keep that from happening.
Hat Tip: Jacob Sullum, at Hit & Run
According to the press report cited in Jacob Sullum’s post, “[the lawsuit] says the proper way to affect prices or behavior is through a taxing authority.” In other words, it’s ethical to alter prices by force, but not through a voluntary agreement among producers. Now while it’s true the agreement here appears less than wholly voluntary, the antitrust suit is still premised on the view that property owners can’t set prices among themselves, regardless of motive.
One other thing — Sovereign immunity doesn’t protect the government here, Radley; the government isn’t a “person” amenable to being sued under the antitrust laws. It can, however, sue to recover damages as a private plaintiff (as opposed to a public-interest plaintiff). The Supreme Court recently affirmed this principle in an attempted antitrust lawsuit against the Postal Service. Since the USPS is a government entity, the Court reasoned it could not be an antitrust defendant because the Sherman Act didn’t extend that far.
I think “The People” should be sued.
What this story omits (and what non-Madisonians won’t know) is that there are almost 5 dozen bars in the State Street corridor, within 5 blocks of this edge of campus. In other words, most bars did not participate in this program. It is really hard to argue for collusion when, first of all, these 24 bars were still all doing business independent of one another (and competing with one another on separate grounds like in their menu offerings, non-special drink pricing, and hours of operation) and, secondly, there were more bars who rebuffed the offer and kept going with their own specials. Instead of a nanny-state issue, this is really a frivolous-lawsuit issue.
(And this doesn’t even get into the real problem, which is that, when there are 56 or so bars competing for college kid revenue, most of them are going to break a few real criminal laws just to stay in business. You think all of these places card aggressively every night?)
Note that students still publicly blame Minnesota kids for the annual Halloween riots on State Street, so the plaintiffs here have a bit of a credibility problem.
diddy, the problem is that in an antitrust lawsuit, the fact that only a small percentage of bars were involved may not matter. “Price fixing” is considered a per se antitrust violation by the courts, which means “market definition”–i.e. economic context–isn’t taken into account.
Skip, I think you’d probably have trouble convincing a jury that it’s price fixing for one bar to offer pitchers for $6 when it used to offer them for $5 and for another bar to offer pitchers for $10 when it used to offer them for $5.
In order to prove price fixing it should be necessary to demonstrate that the prices were broken in the first place.
Bank error in your favor. Collect $200.
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