Moving Sideways: Post-Granholm Developments in Wine Direct Shipping and Their Implications for Competition
Posted: 8 Oct 2015
Date Written: 2008
Abstract
In Granholm v. Heald, the Supreme Court held that state direct-shipping laws that discriminate against out-of-state and in favor of in-state wineries violate the Commerce Clause of the U.S. Constitution. After Granholm, states with discriminatory direct-shipping laws on their books had to make a choice: they could either “level up” by extending direct-shipping privileges to out-of-state wineries, or “level down” by revoking such privileges from in-state wineries. Although no state has leveled down by completely prohibiting wine direct shipping, several states that nominally leveled up have moved “sideways” by levying new restrictions — including on-site purchase requirements and production limitations — on direct shipping, which typically fall more heavily on out-of-state producers. In some cases, such restrictions effectively make direct shipping by out-of-state wineries economically impossible. A Commerce Clause challenge may be the only practical way to attack these restrictions and protect the interests of producers and consumers in enjoying the benefits of a competitive, national market. This article examines the constitutionality of these new restrictions, as well as the broader implications of such restrictions for interstate competition in many products, which has been spurred by the growth of the Internet and e-commerce. The types of restrictions states have enacted to protect in-state interests against increased competition from out-of-state suppliers may be used outside the wine context to impede new forms of competition, with unfortunate results for consumers.
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