January 29, 2008 / 9:59 PM / in 10 years

Costco fails to overturn Wash. state liquor rules

SAN FRANCISCO, Jan 29 (Reuters) - Costco Wholesale Corp (COST.O) lost a bid on Tuesday to overturn Washington state liquor rules that control pricing and discounts.

In 2004, the largest U.S. warehouse club operator filed a complaint against the Washington State Liquor Control Board and claimed that nine of its laws and regulations restricted competitive practices.

For example, the state bans liquor distributors and suppliers from offering customer price discounts based on purchase volume, and it requires most liquor distributors and suppliers to price their products at least 10 percent above their acquisition costs.

Reversing a lower court decision, a three-judge panel on the 9th U.S. Circuit Court of Appeals ruled that these and other pricing provisions are constitutional.

The panel found that only two of the challenged laws violated the Sherman Antitrust Act. These laws require alcohol distributors to record their wholesale prices with the state liquor board and to hold to these prices for at least 30 days.

Costco’s warehouses offer their 50 million members discounted prices on national brand and private-label products, including wine. (Reporting by Amanda Beck; editing by Adam Tanner and Braden Reddall)

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