Justice Marshall
delivered the opinion of the Court.
The State of New York requires every liquor distiller or producer that sells liquor to wholesalers within the State to sell at a price that is no higher than the lowest price the distiller charges wholesalers anywhere else in the United States. The issue in this case is whether that requirement violates the Commerce Clause of the Constitution.
I
New York extensively regulates the sale and distribution of alcoholic beverages within its borders. The State’s Alcoholic Beverage Control Law (ABC Law) prohibits the manufacture and sale of alcoholic beverages within the State without the appropriate licenses, ABC Law § 100(1) (McKinney 1970), and regulates the terms of all sales, §§101-a to 101-bbb (McKinney 1970 and Supp. 1986). Distillers and their agents may not sell to wholesalers in New York except in accordance with a price schedule filed with the State Liquor Authority. § 101-b(3)(a). The distiller or agent must file the price schedule before the 25th day of each month, and the prices therein become effective on the first day of the second following month. The schedule must contain a precise description of each item the distiller intends to sell, and a per-bottle and per-case price. All sales to any wholesaler in New York during the month for which the schedule is in effect must be at those prices.
This litigation concerns § 101 — b(3)(d) of the ABC Law, which requires any distiller or agent that files a schedule of prices to include an affirmation that “the bottle and case price of liquor to wholesalers set forth in such schedule is no higher than the lowest price at which such item of liquor will be sold by such [distiller] to any wholesaler anywhere in any other state of the United States or in the District of Columbia, or to any state (or state agency) which owns and operates retail liquor stores” during the month covered by the schedule. Violation of the statute may lead to revocation of a distiller’s license and the forfeiture of bond posted by the distiller in connection with the license, § 101 — b(6). Twenty other States have similar affirmation laws.
Appellant Brown-Forman Distillers Corp. (BrownForman) is a distiller that owns several brands of liquor that it sells in New York and in other States. Beginning in 1978, appellant has offered its wholesalers cash payments, or “promotional allowances,” which are credited against any amounts due appellant. Appellant intends for wholesalers to use these allowances for advertising; however, the amount of the allowance a wholesaler receives is not tied to the quantity either of the wholesaler’s advertising or of its purchases of appellant’s products. The amount of a particular wholesaler’s allowance does depend on its past purchases and projections of future purchases, but accepting the allowance does not constitute an agreement to purchase any particular quantity of Brown-Forman products. The allowances, therefore, are unconditional, lump-sum payments to all wholesalers, in every State except New York, that purchase Brown-Forman brands.
Appellant offered the promotional allowance to its New York wholesalers, but the Liquor Authority determined that the ABC Law prohibited such payments. The Authority also determined, however, that the payment of promotional allowances to wholesalers in other States lowered the effective price of Brown-Forman brands to those wholesalers, and thus violated § 101 — b(3)(d) of the ABC Law. The Liquor Authority accordingly instituted license revocation proceedings against appellant.
Appellant sought review of the Liquor Authority’s ruling in the state courts, asserting that it was both arbitrary and unconstitutional. Appellant contended that it could not possibly file a schedule of prices that reflected precisely the “effective price” charged to wholesalers in other States, because there was no one “effective price.” Each participating wholesaler could pay a different effective price in a given month depending on the amount of Brown-Forman product it had purchased during that month. Moreover, appellant argued, other States did not treat the promotional allowances as discounts. Were New York to force appellant to reduce its prices in that State, appellant would be charging a lower price to New York wholesalers than the price recognized by other States, thereby forcing appellant to violate the affirmation laws of those States. Appellant contended that the only way to avoid this dilemma was to stop offering promotional allowances, unless other States chose to alter their affirmation laws. By effectively forcing appellant to discontinue a promotional program in other States where that program was legal, appellant argued, New York’s regulation violated the Commerce Clause. Appellant also argued that the affirmation law on its face directly regulated interstate commerce in violation of the Commerce Clause.
The Appellate Division of the New York Supreme Court rejected these arguments, 100 App. Div. 2d 55, 473 N. Y. S. 2d 420 (1984), as did the New York Court of Appeals, 64 N. Y. 2d 479, 479 N. E. 2d 764 (1985). The Court of Appeals concluded, first, that the Liquor Authority’s decision to consider the promotional allowances as a discount was supported by substantial evidence. Second, the court held that the ABC Law as applied does not violate the Commerce Clause, rejecting as speculative appellant’s contention that it cannot comply simultaneously with the affirmation laws of New York and of other States. Finally, the court held that the affirmation law, on its face, does not violate the Commerce Clause. We noted probable jurisdiction limited to the question whether the ABC Law, on its face, violates the Commerce Clause, 474 U. S. 814 (1985). We now reverse.
II
This Court has adopted what amounts to a two-tiered approach to analyzing state economic regulation under the Commerce Clause. When a state statute directly regulates or discriminates against interstate commerce, or when its effect is to favor in-state economic interests over out-of-state interests, we have generally struck down the statute without further inquiry. See, e. g., Philadelphia v. New Jersey, 437 U. S. 617 (1978); Shafer v. Farmers Grain Co., 268 U. S. 189 (1925); Edgar v. MITE Corp., 457 U. S. 624, 640-643 (1982) (plurality opinion). When, however, a statute has only indirect effects on interstate commerce and regulates evenhandedly, we have examined whether the State’s interest is legitimate and whether the burden on interstate commerce clearly exceeds the local benefits. Pike v. Bruce Church, Inc., 397 U. S. 137, 142 (1970). We have also recognized that there is no clear line separating the category of state regulation that is virtually per se invalid under the Commerce Clause, and the category subject to the Pike v. Bruce Church balancing approach. In either situation the critical consideration is the overall effect of the statute on both local and interstate activity. See Raymond Motor Transportation, Inc. v. Rice, 434 U. S. 429, 440-441 (1978).
A
Appellant does not dispute that New York’s affirmation law regulates all distillers , of intoxicating liquors evenhandedly, or that the State’s asserted interest — to assure the lowest possible prices for its residents — is legitimate. Appellant contends that these factors are irrelevant, however, because the lowest-price affirmation provision of the ABC Law falls within that category of direct regulations of interstate commerce that the Commerce Clause wholly forbids. This is so, appellant contends, because the ABC Law effectively regulates the price at which liquor is sold in other States. By requiring distillers to affirm that they will make no sales anywhere in the United States at a price lower than the posted price in New York, appellant argues, New York makes it illegal for a distiller to reduce its price in other States during the period that the posted New York price is in effect. Appellant contends that this constitutes direct regulation of interstate commerce. The law also disadvantages consumers in other States, according to appellant, and is therefore the sort of “simple economic protectionism” that this Court has routinely forbidden. Philadelphia v. New Jersey, supra, at 624.
If appellant has correctly characterized the effect of the New York lowest-price affirmation law, that law violates the Commerce Clause. While a State may seek lower prices for its consumers, it may not insist that producers or consumers in other States surrender whatever competitive advantages they may possess. Baldwin v. G. A. F. Seelig, Inc., 294 U. S. 511, 528 (1935); Schwegmann Brothers Giant Super Markets v. Louisiana Milk Comm’n, 365 F. Supp. 1144 (MD La. 1973), aff’d, 416 U. S. 922 (1974). Economic protectionism is not limited to attempts to convey advantages on local merchants; it may include attempts to give local consumers an advantage over consumers in other States. See, e. g., New England Power Co. v. New Hampshire, 455 U. S. 331, 338 (1982) (State may not require “that its residents be given a preferred right of access, over out-of-state consumers, to natural resources located within its borders”). In Seelig, supra, this Court struck down New York’s Milk Control Act. The Act set minimum prices for milk purchased from producers in New York and in other States, and banned the resale within New York of milk that had been purchased for a lower price. Justice Cardozo’s opinion for the Court recognized that a State may not “establish a wage scale or a scale of prices for use in other states, and . . . bar the sale of the products . . . unless the scale has been observed.” Id., at 528. The mere fact that the effects of New York’s ABC Law are triggered only by sales of liquor within the State of New York therefore does not validate the law if it regulates the out-of-state transactions of distillers who sell in-state. Our inquiry, then, must center on whether New York’s affirmation law regulates commerce in other States.
B
This Court has once before examined the extraterritorial effects of a New York affirmation statute. In Joseph E. Seagram & Sons, Inc. v. Hostetter, 384 U. S. 35 (1966), the Court considered the constitutionality, under the Commerce and Supremacy Clauses, of the predecessor to New York’s current affirmation law. That law differed from the present version in that it required the distiller to affirm that its prices during a given month in New York would be no higher than the lowest price at which the item had been sold elsewhere during the previous month. The Court recognized in that case, as we have here, that the most important issue was whether the statute regulated out-of-state transactions. Id., at 42-43. It concluded, however, that “[t]he mere fact that [the statute] is geared to appellants’ pricing policies in other States is not sufficient to invalidate the statute.” The Court distinguished Seelig, supra, by concluding that any effects of New York’s ABC Law on a distiller’s pricing policies in other States were “largely matters of conjecture,” 384 U. S., at 42-43.
Appellant relies on United States Brewers Assn. v. Healy, 692 F. 2d 275 (CA2 1982), summarily aff’d, 464 U. S. 909 (1983), in seeking to distinguish the present case from Seagram. In Healy, the Court of Appeals for the Second Circuit considered a Connecticut price-affirmation statute for beer sales that is not materially different from the current New York ABC Law. The Connecticut statute, like the ABC Law, required sellers to post prices at the beginning of a month, and proscribed deviation from the posted prices during that month. The statute also required brewers to affirm that their prices in Connecticut were as low as the price at which they would sell beer in any bordering State during the effective month of the posted prices. The Court of Appeals distinguished Seagram based on the “prospective” nature of this affirmation requirement. It concluded that the Connecticut statute made it impossible for a brewer to lower its price in a bordering State in response to market conditions so long as it had a higher posted price in effect in Connecticut. By so doing, the statute “regulate[d] conduct occurring wholly outside the state,” 692 F. 2d, at 279, and thereby violated the Commerce Clause. We affirmed summarily.
C
We agree with appellant and with the Healy court that a “prospective” statute such as Connecticut’s beer affirmation statute, or New York’s liquor affirmation statute, regulates out-of-state transactions in violation of the Commerce Clause. Once a distiller has posted prices in New York, it is not free to change its prices elsewhere in the United States during the relevant month. Forcing a merchant to seek regulatory approval in one State before undertaking a transaction in another directly regulates interstate commerce. Edgar v. MITE Corp., 457 U. S., at 642 (plurality opinion); see also Baldwin v. G. A. F. Seelig, Inc., 294 U. S., at 522 (regulation tending to “mitigate the consequences of competition between the states” constitutes direct regulation). While New York may regulate the sale of liquor within its borders, and may seek low prices for its residents, it may not “project its legislation into [other States] by regulating the price to be paid” for liquor in those States. Id., at 521.
That the ABC Law is addressed only to sales of liquor in New York is irrelevant if the “practical effect” of the law is to control liquor prices in other States. Southern Pacific Co. v. Arizona ex rel. Sullivan, 325 U. S. 761, 775 (1945). We cannot agree with New York that the practical effects of the affirmation law are speculative. It is undisputed that once a distiller’s posted price is in effect in New York, it must seek the approval of the New York State Liquor Authority before it may lower its price for the same item in other States. It is not at all counterintuitive, as the dissent maintains, post, at 588, to assume that the Liquor Authority would not permit appellant to reduce its New York price after the posted price has taken effect. The stated purpose of the prohibition on price changes during a given month is to prevent price discrimination among retailers, see ABC Law §§ 101 — b(l), (2)(a). That goal is in direct conflict with the dissent’s view of the “whole purpose” of the ABC Law, and we have no means of predicting how the Authority would resolve that conflict. We do know, however, that the Liquor Authority forbade appellant to reduce its New York prices by offering promotional allowances to New York retailers, precisely because the Authority believed that program would violate the price-discrimination provisions. App. to Juris. Statement 50a. The dissent would require us to assume that other States will adopt a flexible approach to appellant’s promotional allowance program, post, at 589, despite New York’s refusal to do so.
Moreover, the proliferation of state affirmation laws following this Court’s decision in Seagram, has greatly multiplied the likelihood that a seller will be subjected to inconsistent obligations in different States. The ease with which New York’s lowest-price regulation can interfere with a distiller’s operations in other States is aptly demonstrated by the controversy that gave rise to this lawsuit. By defining the “effective price” of liquor differently from other States, New York can effectively force appellant to abandon its promotional allowance program in States in which that program is legal, or force those other States to alter their own regulatory schemes in order to permit appellant to lower its New York prices without violating the affirmation laws of those States. Thus New York has “projected] its legislation” into other States, and directly regulated commerce therein, in violation of Seelig, supra.
Ill
New York finally contends that the Twenty-first Amendment, which bans the importation or possession of intoxicating liquors into a State “in violation of the laws thereof,” saves the ABC Law from invalidation under the Commerce Clause. That Amendment gives the States wide latitude to regulate the importation and distribution of liquor within their territories, California Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U. S. 97, 107 (1980). Therefore, New York argues, its ABC Law, which regulates the sale of alcoholic beverages within the State, is a valid exercise of the State’s authority.
It is well settled that the Twenty-first Amendment did not entirely remove state regulation of alcohol from the reach of the Commerce Clause. See Bacchus Imports, Ltd. v. Dias, 468 U. S. 263 (1984). Rather, the Twenty-first Amendment and the Commerce Clause “each must be considered in light of the other and in the context of the issues and interests at stake in any concrete case.” Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U. S. 324, 332 (1964). Our task, then, is to reconcile the interests protected by the two constitutional provisions.
New York has a valid constitutional interest in regulating sales of liquor within the territory of New York. Section 2 of the Twenty-first Amendment, however, speaks only to state regulation of the “transportation or importation into any State ... for delivery or use therein” of alcoholic beverages. That Amendment, therefore, gives New York only the authority to control sales of liquor in New York, and confers no authority to control sales in other States. The Commerce Clause operates with full force whenever one State attempts to regulate the transportation and sale of alcoholic beverages destined for distribution and consumption in a foreign country, Idlewild Bon Voyage Liquor Corp., supra, or another State. Our conclusion that New York has attempted to regulate sales in other States of liquor that will be consumed in other States therefore disposes of the Twenty-first Amendment issue.
Moreover, New York’s affirmation law may interfere with the ability of other States to exercise their own authority under the Twenty-first Amendment. Once a distiller has posted prices in New York, it is not free to lower them in another State, even in response to a regulatory directive by that State, without risking forfeiture of its license in New York. New York law, therefore, may force other States either to abandon regulatory goals or to deprive their citizens of the opportunity to purchase brands of liquor that are sold in New York. New York’s reliance on the Twenty-first Amendment is therefore misplaced. Having found that the ABC Law on its face violates the Commerce Clause, and is not a valid exercise of New York’s powers under the Twenty-first Amendment, we reverse the judgment of the New York Court of Appeals.
It is so ordered.
Justice Brennan took no part in the consideration or decision of this case.
These States differ in the time reference for the affirmation price. Some require the distiller to set a price that is no higher than the lowest price charged previously anywhere in the United States, see, e. g., Ariz. Rev. Stat. Ann. §4-253(A) (Supp. 1985). Others, like New York, require the affirmed price to be no higher than the lowest price that will be charged during the current month. See ABC Law § 101-b(3)(d).
There are 18 States, known as “control” States, that purchase all liquor that will be distributed and consumed within their borders. The control States use a standard sales contract that requires the distiller to warrant that the price the distiller charges to the State is no higher than the lowest price offered anywhere else in the United States. See Brief for Appellant 5, n. 4.
The Federal Bureau of Alcohol, Tobacco and Firearms (BATF), upon appellant’s request, ruled that appellant’s promotional allowance does not violate the Federal Alcohol Administration Act, 27 U. S. C. §§201-211. See § 205(b) (prohibiting “paying or crediting [any] retailer [of alcoholic beverages] for any advertising” if done to induce the retailer to purchase alcohol from the person providing such payment or credit to the exclusion in whole or in part of other distillers or producers). Some of the features of appellant’s promotional allowance program described herein were required by BATF in order to ensure that the program would not violate the Act. See Juris. Statement 4.
See § 101-b(2)(b) (prohibiting “any discount, rebate, free goods, allowance or other inducement of any kind whatsoever” except for quantity and prompt-payment discounts of specified amounts).
See § 101-b(3)(g) (in determining lowest price, “appropriate reductions shall be made to reflect all discounts . . . and all rebates, free goods, allowances and other inducements”).
The Liquor Authority may “for good cause shown” permit a distiller to change its prices during a particular month, ABC Law § 101-b(3)(a), and New York speculates that the Authority would permit a distiller to lower its prices in other States in a given month so long as the distiller also lowers them in New York. However, whether to permit such a deviation from the statutory scheme is a matter left by the statute to the discretion of the Liquor Authority.
We would not solve the constitutional problems inherent in New York’s statute by indulging the dissent’s assumption that the Authority will be sensitive to Commerce Clause concerns. Certainly New York could not require an out-of-state company to receive a license from New York to do business in other States, even if we were quite sure that such licenses would be granted as a matter of course. Similarly, New York simply may not force appellant to seek regulatory approval from New York before it can reduce its prices in another State. The protections afforded by the Commerce Clause cannot be made to depend on the good grace of a state agency.
While we hold that New York’s prospective price affirmation statute violates the Commerce Clause, we do not necessarily attach constitutional significance to the difference between a prospective statute and the retrospective statute at issue in Seagram. Indeed, one could argue that the effects of the statute in Seagram do not differ markedly from the effects of the statute at issue in the present case. If there is a conflict between today’s decision and the Seagram decision, however, there will be time enough to address that conflict should a case arise involving a retrospective statute. Because no such statute is before us now, we need not consider the continuing validity of Seagram.