FOR YOUR INFORMATION........................March 16, 1987 The Federal Trade Commission staff has recommended that the Maryland House of Delegates reject a proposal to regulate the business arrangements between suppliers and wholesale distributors of wine coolers, saying it would likely increase the costs of wine coolers to consumers. The House's Economic Matters Committee is considering the proposed Wine Cooler Fair Dealing Act. It would restrict distributors from selling wine coolers outside their designated sales territories, limit suppliers' ability to terminate distribution agreements with the distributors, and restrain suppliers from imposing certain requirements on their distributors. In a letter, the FTC staff described possible anticompetitive effects of the proposed bill. The staff further said that the bill could make it more difficult for suppliers to fashion efficient distribution systems and could increase the costs of distributing wine coolers. According to the staff, "the bill is special interest legislation. It would harm consumers who would be forced to pay the higher prices caused by the protection of inefficient distributors from new entrants, and the preservation of obsolete distributional arrangements." The staff pointed out that a more appropriate way for the legislature to achieve the stated purpose of discouraging alcohol consumption would be to tax the products directly. The letter represents the views of the FTC's Bureaus of Competition, Consumer Protection, and Economics, and does not necessarily reflect the views of the Commission or any individual Commissioner. Copies of the letter are available from the FTC's Public Reference Branch, Room 130, 6th St. and Pennsylvania Ave. N.W., Washington, D.C. 20580; 202-326-2222; TTY 202-326-2502. # # # MEDIA CONTACT: Susan Ticknor, Office of Public Affairs, 202-326-2179 STAFF CONTACT: Renee S. Henning, Bureau of Competition, 202-326-2621 (WineCooler)