Sour Grapes

Special interests are mounting an intense campaign in Sacramento to enact a new form of protectionism for a small group of importers seeking to control the flow of wine into the state in order to dictate prices.

Sen. Ralph C. Dills (D-Gardena), leader of this legislative move, disputes the charge that he has abandoned the interests of consumers, and insists that his only real opponents are the affluent in search of bargains on imported champagne. Not so. His move is nothing more than a maneuver to frustrate competition and control prices to the advantage of a few importers and a few domestic producers and to the disadvantage of thousands of consumers.

“It is simply an attempt to restrict competition and thereby maintain high prices,” according to Atty. Gen. John K. Van de Kamp, and he is right.

There is evidence for all to see of what this sort of legislation does. The Legislature acted previously to protect importers of hard liquor, granting them extraordinary control over supply and price. As a consequence, the price of imported liquor has not reflected the substantial increase in the dollar’s value that has resulted, in almost all other imports, in substantial price cuts for U.S. consumers.

Champagne is the symbol of the new struggle, because its relatively high price hides the kind of substantial markup that leaves plenty of room for entrepreneurs to compete. And compete they have. Bypassing the neat little deals struck between major importers and their overseas suppliers, the entrepreneurs have bought directly and distributed independently, with the result that some prices have been cut at least in half. It is, as the attorney general said, “a textbook example of competition in a free market working to reduce artificially inflated prices.” Right again.

But artificial prices have their advocates. And competition has its enemies. Importers, supported by California wine growers with an increasing affection for government protection, like the artificially inflated prices on imports. And they have made $1.4 million in campaign contributions, including $37,000 to Sen. Dills, to emphasize their concern.

The California protectionist move contrasts with actions of the European Economic Community, which has supported efforts to end price-fixing and has fined at least one manufacturer for violations of free trade. The Europeans are correct. The only protection that the California wine producers require is protection from unfair competition. That they already have.