The Fix Is In
The Capital Times
Drink special ban is price fixing
By Mike Ivey and Aaron Nathans
A class action lawsuit was filed today in Dane County Circuit Court accusing 24 downtown Madison taverns and the Madison-Dane County Tavern League of conspiring to fix prices on beer and liquor.
The suit, filed by a Minneapolis law firm on behalf of three University of Wisconsin-Madison students, says taverns that agreed to eliminate weekend drink specials - a step strongly urged by Chancellor John Wiley - committed felony violations of both state and federal antitrust law, regardless of their intent. It also accuses UW-Madison of participating.
The suit maintains that the victims of price fixing - basically anyone who patronized the downtown taverns on Friday or Saturday nights and paid full price - are entitled to triple damages under antitrust law.
The three UW-Madison students, in their lawsuit, say they have four primary objectives:
To break up the "Madison Bar Cartel," which includes popular taverns such as the Nitty Gritty, Kollege Klub and Angelic Brewing Co.
To return price competition to the business of selling alcoholic beverages in downtown Madison.
To uncover the full duration, scope, nature of operation and economic impact of the "cartel."
To recover and return to victims, primarily UW-Madison students, the full measure of damages. The awards could be "in the tens of millions of dollars," the suit contends.
UW-Madison students Nic Eichenseer, Brian Dougherty and Eric Stener are listed as lead plaintiffs in the class action. All three said in the suit they purchased alcoholic beverages on Friday or Saturday after 8 p.m. from the taverns named in the suit.
A voluntary effort by downtown Madison bars to limit weekend drink specials has been in effect since Oct. 1, 2002, as part of the federally funded PACE project. PACE, which stands for Policy, Alternatives, Community and Education, is in the seventh year of a comprehensive campus-community partnership designed to reduce the negative consequences of high-risk drinking.
Casey Nagy, an assistant to Wiley, said today he hadn't seen the suit but said it was "creative" in making its argument for illegal price fixing.
"I think they'd have a hard time arguing there was any price fixing, but I guess we'll see," he said.
Lee Pier, general manager of the Nitty Gritty Tavern, said there has been no wrongdoing on the part of any tavern.
"I don't know of any kind of agreement on what prices will be," he said. "This is something we did on a voluntary basis in response to the City Council and the UW."
But Peter Carstensen, a professor at the UW-Madison Law School, said he was surprised nobody in the university's legal counsel office, nor at the City Attorney's Office, recognized there was a problem with the voluntary ban.
"The general rule of antitrust law is, competitors cannot agree about how they will compete. If that's what happened with these bars, then they're in serious trouble," Carstensen said.
The taverns named in the suit are Amy's Cafe, Angelic Brewing Co., Brothers, Buffalo Wild Wings, Bull Feathers, City Bar, Club Amazon, Kollege Klub, Lava Lounge, Mad Dogs Pub & Pizzeria, Madhatters, Mondays, the Nitty Gritty, Paul's Club, Plaza Tavern, The Pub, Red Shed, Spices Restaurante, State Bar, State Street Brats, Stillwaters, Vintage, Wandos and Irish Pub.
The suit contends that UW actively encouraged formation of the "cartel," making it the centerpiece of its anti-drinking effort. It says UW has no "legal authority to organize a cartel among of group of competitors whenever its social scientists believe that a particular product (beer, cigarettes, gasoline, ice cream, music, etc.) is being consumed in excess by its students."
It says the proper way to affect prices or behavior is through a taxing authority.
Carstensen agreed, saying that everything would have been different if the city or state had instead come up with an ordinance or law to forbid a certain type of conduct.
"One of the things that they say about conspiracies, you can do it best when it's out in the open and everybody's looking at you and nobody notices what's going on," he said.
Susan Crowley, a coordinator of the PACE program, said the lawsuit would have no impact on the program. She said the university is continuing to support the ban on weekend drink specials and noted that the program has another 2 years to run.
"It's still alive and kicking," she said.
Data on the effect of the ban on drink specials have been mixed. A study released by the project shows that since the implementation of bans on weekend drink specials in downtown bars, alcohol-related crimes have actually increased.
Tom Powell, a member of the Madison Alcohol License Review Committee, agreed that the voluntary weekend ban on drink specials didn't have much of an impact on student behavior, since most drink specials are offered toward the beginning of the week.
Powell said the students' class action suit is "misguided," and called the ban a "dead issue."
"I don't know how they're going to calculate the amount of damages," he said. "I hope they kept their receipts."
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