Just last week, the U.S. Supreme Court signaled its willingness to strike down state laws that distort free trade in wine and alcoholic beverages. But New York State continues zealously to enforce its bizarre array of anticompetitive rules and regulations.

Whole Foods Market closed the wine shop in its Columbus Circle store this month after state regulators determined that the shop was selling wine – gasp! – inside a grocery store. That’s illegal in New York, it turns out. State law prohibits wine and liquor stores from selling food. The stores must maintain a separate entrance at street level.

The state’s Division of Alcoholic Beverage Control fined Whole Foods $5,000 on April 7 and gave the retailer 30 days to sell off its stock, according to a dispatch in yesterday’s New York Times. Whole Foods shut down the shop two weeks ago and surrendered its liquor license.

Whole Foods plans to transfer the license for use in a new store on East Houston Street, where the planned wine shop will have its own separate entrance on Chrystie Street. This will be the only replacement for the Columbus Circle shop because state law also forbids licensed liquor retailers from owning more than one store.

Even that is too much for Whole Foods’s prospective competitors. Owners of wine shops near the planned Whole Foods store are already imploring Community Board 3 to oppose the store before the state alcohol agency. “Competition is fine, but we’re not happy about the way they can underprice us,” Anthony White, an owner of Discovery Wines on Avenue A, told the Times. “We’re buying cases and they’re buying pallets.”

Forgive us for sounding insensitive, but doesn’t competition entail offering lower prices? It’s understandable that high-priced liquor sellers would not be happy when consumers can find lower prices elsewhere, but since when is it the job of Governor Pataki, Senator Bruno, Speaker Silver, et al. to keep prices artificially high?

New York’s labyrinthine alcohol regulations do nothing to protect minors from the dangers of alcohol consumption, as some state bureaucrats claim. Beer, after all, is available in New York supermarkets. The laws only deny consumers the full benefit of competitive markets. If Californians can buy wine in their grocery stores – and they can – why must New Yorkers be denied the same convenience?

The state’s alcohol laws act as the worst sort of protectionism, subsidizing inefficient businesses and forcing consumers to pay for it. We’ll open a bottle of our finest wine and raise a toast to any politician who will work to repeal New York’s protectionist alcohol laws.