WIGS revision includes ‘anti-competition’ provision

By Eric Schelzig, Associated Press
NASHVILLE, Tenn. — The operator of a large chain of beer and liquor stores says an effort to cap new retail licenses is an effort to stamp out competition in Tennessee.

The main focus of the bill that advanced out of the House State Government Committee on Tuesday is to let supermarkets stock up ahead of when a law allows them to begin selling wine July 1. But the bill would also create a two-license limit for new liquor stores.

“This anti-free trade, anti-competitive provision targets squarely at Total Wine & More,” wrote Kevin Peters, the CEO of the Bethesda, Maryland-based company that operates 131 stores in 18 states.

Peters said the bill would “deprive Tennessee communities of jobs, benefits and consumer choice”

Tennessee lawmakers lifted the cap on licenses as a concession to liquor stores owners who largely opposed the wine-in-supermarkets bill in 2014.

But Rep. Jon Lundberg, R-Bristol and an original sponsor of the supermarket wine bill, said he has “real issues” with reinstating a cap on liquor store licenses.

“What liquor store owners wanted before was the ability to open multiple locations,” Lundberg said. “We gave them that, and now they’re concerned that — oh, my gosh — they could have competition.

“Well, the competition is among themselves,” Lundberg said. “Frankly, that’s how business works.”

David McMahan, a lobbyist for Tennessee Wine and Spirits Retailers Association, said liquor store owners had originally thought that lifting the cap would help them compete with grocery store chains that can sell wine. But now they worry about being squashed by larger competitors.

“We think that would be the one-two punch that would essentially end that industry,” McMahan said. “It would be like Wal-Mart did to downtown squares. There wouldn’t be many liquor stores left.”

The decision to try to go back to the two-store limit came after a state attorney general’s opinion found constitutional concerns with a residency requirement for liquor store owners, McMahan said.

“I get the whole free market thing, but you’re dealing with a controlled product,” he said. “I don’t think that cheaper, more available liquor everywhere is what Tennesseans want.”

Under Tennessee’s old law, supermarkets could not sell alcoholic drinks stronger than beer, while liquor stores were not allowed to sell anything beyond booze and lottery tickets. The new law allowed liquor stores to start selling other items like beer, ice, cigarettes and food. But it required communities to hold referendums on whether to allow supermarket wine sales stating nearly two years after the vote.

Although voters overwhelmingly approved the referendums, the law did not provide a mechanism for grocery stores to fill their shelves before the July 1 date that they would be allowed to start selling wine. The sponsor of the current legislation, Republican Rep. Curry Todd of Collierville, said it could take up to four months to deliver wine to all the stores.

Todd warned colleagues last week that he would withdraw the measure if there are any attempts to introduce major changes.

“If any amendments are put on there, I will pull the bill,” Todd said. “And then nobody will be stocked.”

Note: The bill is HB2586. Previous post on overall bill with a mention of the two-store limitation is HERE.