Walmart Takes Texas To Court Over Booze
Walmart is determined to be able to sell liquor in Texas.
Late last year, Walmart initially went to court to fight to change what it calls constitutional discrimination against the nation's largest retailer - and now liquor store owners are joining the battle to stop Walmart from getting the right to sell booze by the bottle.
And this isn't just about Walmart wanting to corner the market on practically everything. The sale of liquor in Texas is very big business. The state comptroller's office says liquor sales amount to a $14 billion business annually in Texas and the retail giant appears determined to no longer leave that money on the table.
Walmart stores already sell beer and wine but Texas law currently prohibits them from selling hard liquor. In Texas, publicly traded companies are not allowed to hold liquor licenses. It's a policy that dates back to the 1930s and Walmart feels the policy is an antiquated one.
“Wal-Mart is therefore irrationally banned from competing with privately owned companies that are, unlike publicly traded corporations, allowed to obtain package store permits,” the company wrote in its complaint filed against the Texas Alcohol Beverage Commission in federal court earlier this year.
Additionally, Walmart takes issue with the fact that Texas law prohibits persons or companies from holding any more than five permits to sell alcohol. So, even if they weren't a publicly traded company, Walmart says that the law is irrational. They own 532 stores in Texas so, clearly, they need more than five permits.
Further, Walmart notes that the Texas law doesn't make sense because, somehow, hotels are exempt from these rules - even publicly traded hotel chains.
Texas, in response, says that the rules are in place in order to ensure fairness in the booze market and to stop large monoliths like Walmart from running independent Mom & Pop liquor stores out of business.
But Walmart says that the laws are discriminatory against non-Texans.
Walmart also takes exception with a “close family member” loophole in the five permit limit rule that allows blood relatives to continually acquire licenses, consolidate them into a single private entity, transfer ownership of the private entity to one family member, and then repeat the process.
In July, a Texas district court denied the TABC's motion to dismiss the case on the grounds that Texas has the authority to restrict the sale of alcohol and promote temperance.
While the case was set to go to trial next month, everything was put on hold in May when the Texas Package Stores Association, representing about 2,500 existing liquor store retailers, joined the lawsuit.
They contend that Walmart wants to “upset the level playing field” and “change the structure of the Texas market” that has existed for decades so the company can make “mass sales of low-priced liquor.”
But Texas liquor store owners are worried.
Augustine Chukwura, owner of Austin’s Liquor, told KXAN, "Given what I know from Walmart, eventually they’re going to get what they want, they’re big enough, they have the money.”