## Facts

- California required wine producers and wholesalers to file fair-trade contracts or price schedules with the state.
- If a producer did not set prices by contract, wholesalers had to post a resale price schedule and could not sell to retailers at prices other than the filed price.
- Wholesalers who sold below the filed prices faced state sanctions, including fines and possible suspension or revocation of their licenses.
- Midcal, a wine wholesaler, was charged with selling below filed prices and selling wine without an applicable filed contract or schedule.
- Midcal sought to enjoin enforcement, arguing the scheme was unlawful resale price maintenance under the Sherman Act and was not protected by state-action immunity or the Twenty-First Amendment.
- A California appellate court held the scheme violated the Sherman Act and granted injunctive relief; the U.S. Supreme Court granted certiorari.

## Issues

1. Whether California’s statutory wine resale price maintenance scheme is immune from Sherman Act liability under the state-action doctrine.
2. Whether § 2 of the Twenty-First Amendment shields the pricing scheme from application of the Sherman Act.

## Decision

- The Court affirmed the judgment enjoining enforcement of the pricing scheme.
- The scheme constituted resale price maintenance in violation of the Sherman Act.
- The scheme was not entitled to state-action immunity because, although clearly expressed as state policy, it was not actively supervised by the state.
- The Twenty-First Amendment did not bar application of the Sherman Act to the scheme.

## Legal Principles

- When private parties implement a state-authorized restraint, state-action antitrust immunity requires: (1) a clearly articulated and affirmatively expressed state policy to displace competition, and (2) active state supervision of the restraint.
- State “authorization” and enforcement of privately set prices, without state review, approval, or control over the substance of pricing decisions, does not satisfy active supervision.
- The Twenty-First Amendment grants states broad regulatory authority over alcohol, but it does not create a general exemption from federal antitrust law where the state effectively enforces unsupervised private price fixing.

## Conclusion

California’s wine pricing system unlawfully restrained trade by compelling adherence to privately set resale prices, failed the active-supervision requirement for state-action immunity, and was not saved by the Twenty-First Amendment; injunctive relief against enforcement was therefore proper.


California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980)