Residents are missing out on substantial savings in liquor prices because of "economic blackmail'' by local sellers of wines and spirits.

This was the claim yesterday of restaurant and liquor store owner Mr. Andy Allen.

He was angered at being stopped from importing alcoholic beverages directly through a US wholesaler at discount prices, which would enable him to offer customers a 20 percent savings at his South Shore liquor store Henry's Pantry, next to Henry VIIIth restaurant.

Describing the Bermuda Victuallers Association as a "cartel'', Mr. Allen charged: "There's supposed to be free trade in Bermuda but there's not.'' The association, however, said its members invested large sums of money in marketing wines and spirits for which they had obtained sole rights to sell in Bermuda from the brand owners.

Mr. Allen was "undercutting'' them by buying their liquors from a discount wholesaler in Florida and then knocking up to 20 percent off the price, association member Mr. Richard Hartley said.

While Mr. Allen's actions were not illegal, he was going against association policy, he said.

The association had not planned to take any legal action against Mr. Allen, he said. It had simply told him that if he continued importing members' liquor brands, they would no longer do business with him.

Mr. Hartley said this would mean member merchants would not sell any liquor at all to him, including the popular local Gosling's Black Seal rum and related products.

They would also cut off his credit and no longer deliver free of charge to him.

"We told him we are not prepared to supply to him on the same terms as in the past if he is going to go into competition with us,'' Mr. Hartley said.

"It's called grey marketing in the trade and it is not unusual.'' Mr. Allen, who had brought in only one shipment of discount liquor, reluctantly agreed to adhere to the association's terms, he said.

But Mr. Allen indicated yesterday he was not giving up.

"This is an unfair restriction on the trade and it's the guy on the street who suffers,'' he said.