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Monday, May 16, 2005

Drink Wine and Be Merry
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I don't know what the wine-drinking habits are of the nine Supreme Court members, but I do know that 5 of the 9 got it right in ruling that states can't prohibit the purchase of wine from a vineyard in another state. PFF filed an amicus curiae brief in Granholm v. Heald, arguing that the Interstate Commerce clause clearly protected such commerce, which increasingly comes in the form of e-commerce.

When covering this issue as a reporter, what always struck me was that even those advocating regulations banning sales seemed uncomfortable with them. After all, despite the red-herring arguments about protecting children, the real issue here was that wholesalers didn't want to get cut out of what had long been a very prosperous loop. The Internet was a force of creative destruction for wholesalers, completely changing the way consumers shopped. Invariably, in a Schumpeterian shift like this, there are winners and losers -- when Federal Express revolutionized package shipping, it took away the most profitable part of USPS' business -- but the consumer almost always wins. Now a consumer can order wine online, exposed to a far greater variety of merchants offering more wine at what will become cheaper prices -- and shipping will cost less than it did before FedEx's Frederick W. Smith wrote an underappreciated undergraduate paper at Yale.

Hearing about the decision brought me back to my most recent trip to the Supreme Court. I was standing on the steps while the Grokster case was being argued. It was crowded, and I couldn't help but overhear one lawyer speaking to another. "You working on any other Supreme Court cases?" "Yeah, I'm involved with the online wine sales case." "Oh, which side?" "The wholesalers. [Pause.] But I'll be honest with you, there's a little vineyard in California I discovered a few years ago that I love to order from."

Our senior vp for research, Tom Lenard, was part of our amicus brief and had this to say today: "The Internet is the quintessential interstate medium that overcomes the tyranny of distance, letting sellers in every state reach customers in every other state. There is no place in this e-commerce age for state regulatory roadblocks. Today the High Court recognized that fact, and consumers will benefit as a result."

Our president, Ray Gifford, said this: "Today's decision means consumers will have greater selection at lower prices. That is what a free market is all about. Consumers today should be celebrating, and I think I'll celebrate by firing up my web browser and ordering myself a robust red Zinfandel."

I'm not a huge Zinfandel fan, but I do prefer red. Hopefully Ray will have that bottle delivered here to D.C. and not to his home in Colorado, because I'd like to have a glass and toast the High Court.

posted by Patrick Ross @ 12:31 PM | E-commerce

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