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Madison, WI, Taverns Under Fire for Price-Fixing

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Case ID: 3311 | Miscellaneous | 04/13/2004

A Wisconsin class action has been filed against the Madison-Dane County Tavern League and 24 bars near the University of Wisconsin campus on behalf of weekend bar-goers who allege that the bars have been spared together to fix prices in violation of state and federal antitrust law. The action seeks unspecified compensatory and triple punitive damages.

The action alleges that by agreeing to eliminate weekend drink specials, the taverns created a cartel that has the side effect of illegally meddling with competition. The voluntary ban on specials took effect September 13, 2002, supposedly as a compromise move meant to prevent a mandatory ban from the City Council. The voluntary effort by downtown Madison bars to limit weekend drink specials was started 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. The ban allegedly came about because of urging by UW Chancellor John Wiley -the action also accuses UW-Madison of participating in the scheme.

Peter Carstensen, a professor at the UW-Madison Law School, went on the record saying, "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." 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 further alleges that 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. The action goes on to allege that the proper way to affect prices or behavior is through a taxing authority.

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.


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