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Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20170&cosponId=25313
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House of Representatives
Session of 2017 - 2018 Regular Session

MEMORANDUM

Posted: February 28, 2018 03:09 PM
From: Representative Jesse Topper
To: All House members
Subject: Elimination of PLCB's Flexible Pricing
 
As many of you are aware, last session the General Assembly passed historic liquor legislation (Act 39) that altered our archaic liquor system. In addition, you may be aware of a provision that provides the Pennsylvania Liquor Control Board (PLCB) with what is referred to as flexible pricing.

Flexible pricing allows the PLCB to “price its best-selling items and limited purchase items in a manner that maximizes the return on the sale of those items” and to “discount the price of discontinued items.”

The PLCB championed flexible pricing as a way for the Board to more effectively negotiate with liquor suppliers, and to provide more revenue to the Commonwealth, while also using the new leverage flexible pricing provides the Board to lower the price of some products in State Stores.

After seeing the impact of flexible pricing, I have not been convinced that this change has led to lower prices for the consumer, nor has the Board convincingly shown that this provision has provided our Commonwealth with increased revenues.

Prior to passage of Act 39, the PLCB had to follow a strict pricing formula that required prices to be proportional. Under the proportional pricing formula, the PLCB was required to pass savings onto the consumer anytime suppliers discounted their prices. This offered the consumer a level of protection.

Since the PLCB is neither constrained by market discipline nor anti-trust laws, my legislation will simply repeal the flexible pricing provision in statute in order to reinstitute some kind of consumer protection for the PLCB. As legislators, I believe we owe our constituents the protection that proportional pricing gave them.

Thank you in advance for consideration of my legislation.



Introduced as HB2263