With online alcohol orders rising, legislative committee rejects proposal to prohibit higher online prices

A man wearing a protective mask makes a purchase from a cashier wearing a protective mask as the coronavirus continues to spread on April 04, 2020 in New York City. (Photo by Cindy Ord/Getty Images)

In an oversight hearing Wednesday, the House Ways & Means Committee rejected part of a proposed regulation that would require online prices of alcohol sold in Louisiana to match the retailer’s in-store prices. The Louisiana Office of Alcohol & Tobacco Control (ATC) proposed the law to prevent attempts at profit-sharing or price gouging by third-party delivery companies, but one Republican lawmaker said the agency was engaging in “price-fixing.”

With restaurants and bars open to smaller crowds and more people curtailing their activities due to the COVID-19 pandemic, more and more people are relying on services that deliver them alcohol. State law allows delivery companies to charge a delivery fee to retailers for alcoholic beverages, but the legislation behind that law did not intend to allow third parties to set or change the consumer-end prices of alcohol, according to ATC Commissioner Ernest Legier. Also, sharing in proceeds of alcohol sales is illegal in Louisiana.

The ATC has rule-making authority subject to oversight from the legislature and the governor. Legier told the committee that ATC’s proposed rule would preserve a retailer’s right to set prices that can’t legally be manipulated by a third-party. He referred specifically to Shipt, an online alcohol delivery startup that opposes the proposed rule.

“In practice, should we adopt the business model proposed by Shipt and similarly-situated companies, there are additional hidden fees that affect directly the consumer such that a $5 purchase, if purchased online, turns into a $15 or $20 purchase,” Legier said. “If Shipt is charging a fee to the retailer, shouldn’t that fee include their cost of doing business?”

An attorney from Shipt said the company fears it would be responsible if retailers who use their app change their in-store prices but delay in updating their prices online. The company doesn’t want to unintentionally violate the law if a client forgets or waits a few hours to send them an updated price list, attorney Anne Junia said. “The issue is that Shipt will get a violation if that store price does not match Shipt’s platform price.”

“Shipt does not mark up these prices,” the attorney said. “That is 100 percent the retailer, and they should be free to make their business decisions as they see fit.”

Legier disputed that and said he spoke to a major retailer with stores in all 64 of Louisiana’s parishes who told him that its deal with Shipt includes sharing 10 to 15 percent of an online markup price.

“That is not hearsay,” Legier said. “That is my own conversation with a retailer here who does business in the entirety of the state.”

However, most of the committee members were not receptive to the rule Legier’s agency proposed.

“It’s akin to price-fixing,” Rep. Barry, R-Baton Rouge, Ivey said. “Y’all are effectively price-fixing what a retail establishment can charge for alcohol being delivered versus what is on the shelf.”

The committee voted 13-2 rejecting the proposal with Rep. Marcus Bryant, D-New Iberia, and Rep. Tammy Phelps, D-Shreveport, voting in favor. The governor has 10 days to sign or object to the committee’s decision unless the Senate’s oversight committee acts in similar fashion to the House.

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