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CONTACT: Patrick Ross
December 7, 2004
(202) 289-8928
PFF Urges E-Commerce Win in Wine Case
U.S. Supreme Court Hears Oral Arguments Today

WASHINGTON D.C. - The Progress & Freedom Foundation is urging the U.S. Supreme Court to rule in favor of e-commerce and against state encroachment on interstate commerce as it hears oral arguments today in Granhom v. Heald. The case involves efforts by the state of Michigan to ban direct sale by out-of-state wineries to Michigan consumers, while permitting direct sales by Michigan wineries.

"This case fundamentally is about the viability of interstate e-commerce in the United States," says Tom Lenard, senior fellow and vice president for research at The Progress & Freedom Foundation. "The Internet is the quintessential interstate medium that overcomes the tyranny of distance, letting sellers in every state reach customers in every other state."

The Foundation joined with several other supporters of e-commerce in an amicus brief that successfully urged the High Court to consider the case. Michigan law prohibiting consumers from purchasing wine online from out-of-state sellers is unconstitutional under the dormant Commerce Clause doctrine, the brief argues, because the state failed to pursue a nondiscriminatory approach. The fact that Michigan wineries can sell directly to consumers means the Commerce Clause also trumps the 21st Amendment, which Lenard says "should not be a license to discriminate against interstate sales or to protect local merchants from interstate competition."

In The Digital Economy Fact Book published by The Progress & Freedom Foundation, it's predicted that business-to-consumer e-commerce is expected to grow to $229 billion in 2008 from $95.7 billion in 2003. Business-to-business e-commerce had already reached $1 trillion in 2002. "The benefits of e-commerce to consumers are the benefits of market competition," says Lenard, "namely greater choice and lower prices. Such competition has begun to displace entrenched local commercial interests who view the Internet as a threat, however, and in Michigan they are seeking discriminatory state regulation in order to stifle the growth of e-commerce."

The Supreme Court today held oral arguments in Granholm v. Heald and related cases consolidated with Granholm. The Court is expected to reach its decision by June. Lenard is available today for media inquiries on the case.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation