TABC and TPSA Win Second Round in The “Battle of the Booze”

It is common knowledge that Texas has some interesting alcohol laws. Ever tried buying wine at Trader Joe’s on a Sunday before noon? Just earlier this week, Texas began allowing its more than 250 breweries to sell beer to take home. For a full review of Texas’ alcohol laws, check out this summary article from the Texas Tribune.

While some of Texas’ laws are peculiar, the one that puts the Lone in Lone Star State is its law that “bars publicly traded corporations from holding liquor permits.” This law, the only in the nation, restricts businesses such as Walmart and Costco from selling liquor.

Four and a half years ago, in February 2015, Walmart filed a lawsuit against the Texas Alcoholic Beverage Commission (TABC), challenging the liquor laws in Texas, with the ultimate goal of gaining access to sell liquor in its stores in Texas.

The Texas Package Stores Association (TPSA) intervened in the case in defense of the statute and hired experts Dr. Devrim Ikizler and Prof. Stephen Magee to analyze the effects of the current laws on the statewide liquor consumption, and small and large businesses.

The team’s expert report included predictive modeling and industry-wide analysis that demonstrated some important (and challenged) public health related consequences / benefits of the statute. One of the expert’s principal findings was that “the law helps reduce the negative consequences of higher per-capita liquor consumption by limiting where liquor can be sold” (Texas Tribune), by reducing access, increasing transaction costs, and limiting supply. While the District’s court initially ruled in favor of Walmart, TPSA and TABC appealed the decision.

On August 15, 2019 the 5th Circuit United States Court of Appeals vacated and remanded the case back to the district court, finding Texas Law 22.16 violated the dormant Commerce clause. The court cited that it “erred in its findings regarding the discriminatory nature and burden imposed by the public corporation ban (Alcohol Law Review).”

The statistical and market analysis conducted by Dr. Ikizler was crucial in the District court’s ruling for understanding the true effects of the existing laws on the marketplace, consumption and public health; and effects on in-state vs out-of-state firms.

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Intelligent Analytics & Modeling is an economic consulting firm with extensive experience providing expert witness services for law firms in antitrust, patent infringement, insurance, trade secrets and employment cases.

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