by D. Taylor Harper
Great article and overview by Pat Tuley and Josh Jones of Porter Keadle Moore (accounting firm and Allied Trade Member of the Georgia Craft Brewers Guild):
by Matthew Guarnaccia
June 7, 2017
A pair of consumer advocacy groups on Tuesday asked a District of Columbia federal judge to allow them to weigh in on the $100 billion acquisition of SABMiller by Anheuser-Busch InBev as they seek increased scrutiny of the antitrust fixes required to complete the deal.
The motion by Consumer Action and Consumer Watchdog is part of the lawsuit filed by the U.S. against AB InBev and SABMiller to determine whether the antitrust remedies laid out by the U.S. Department of Justice are adequate to prevent a loss of competition in the beer industry The DOJ entered into a proposed final judgment with AB InBev in July, allowing the world’s largest brewer to complete the deal as long as SABMiller divested its U.S. interest in MillerCoors, among other fixes.
But in their proposed amicus brief on Tuesday, Consumer Action and Consumer Watchdog urged U.S. District Judge Emmet Sullivan to fully consider the proposed final judgment, expressing concerns held by by smaller industry players and others that the deal would not sufficiently alleviate anti-competition concerns. They said that the DOJ admitted in its July 20 complaint that AB InBev has engaged in anti-competitive activities for years, and argued that the beer industry will be harmed if Judge Sullivan approves the proposed final judgment as written.
by Jason Notte
May 18, 2017
Anheuser-Busch doles out beer money as regulators’ scrutiny increases (Additional Coverage)
Anheuser-Busch InBev is throwing $4.5 billion at the U.S. beer industry in the span of a decade, and that should worry competitors. But it should make the sprawling global brewer nervous as well.
On May 15, Anheuser-Busch InBev SA BUD, -2.10% announced that it planned to spend $500 million on U.S. brewing, production and distribution this year and another $2 billion through 2020. As the company points out, it has invested $2.5 billion here since 2011, but we’ll note that it’s also faced a growing amount of regulatory scrutiny with each step.
by Justin Kendall
May. 18, 2017
Massachusetts Beer Distributors Push Franchise Reform Bill at State House
More than 80 members of the Beer Distributors of Massachusetts lobbied state lawmakers on Beacon Hill yesterday, rallying behind House Bill 2823, which would allow beer companies making less than 30,000 barrels annually to terminate relationships with wholesalers for no cause.
“In the halls of this building, where they look for consensus, I think rarely in their experience have they seen a bill that delivers a 97 percent solution,” Beer Distributors of Massachusetts president William Kelly told Brewbound. “That is, 97 percent of the breweries that were operating nationally at the end of the 2015 basically get a new choice in House Bill 2823.”
The issue of franchise law reform has been hotly contested in Massachusetts for many years.
Over the past six years, brewery owners have lobbied behind numerous pieces of legislation that would have significantly altered the strict franchise laws that govern relationships between beer manufacturers and wholesalers.
In each of those bills, breweries whose brands accounted for less than 20 percent of a wholesaler’s total annual sales would have been allowed to terminate contracts, without cause, as long as distributors were also compensated “fair market value” for the loss of business.
Massachusetts wholesalers have repeatedly blocked those attempts, however.
“We just think that’s too destructive because, quite frankly, that would let every single brand leave save one – the most prominent one – which is probably at this stage in the game anywhere from 40-to-45 percent [of a wholesaler’s business],” Kelly said. “So I think it’s unfair and unreasonable to believe that any business in this economic climate could take a 55 percent loss to business and continue on at all.”
After numerous failed efforts to move those brewer-friendly bills forward, lawmakers encouraged both parties to come to a compromise.
But in January, after years of playing defense, wholesalers took an offensive-minded approach and introduced their own bill, HB 2823.
by Jennifer Levitz
May 16, 2017
A battle is brewing in Massachusetts between state regulators and Anheuser-Busch InBev NV over allegations the beer giant has provided nearly $1 million in unlawful giveaways to entice retailers and bars to push Budweiser over rivals.
The state’s Alcoholic Beverages Control Commission has issued a report detailing investigators’ findings and set a June hearing in Boston on the matter. The report alleges a subsidiary of AB InBev gave out bar equipment as incentives to hundreds of Massachusetts businesses in violation of a state law meant to keep beer companies from squeezing out competitors.
Sales representatives “offered the refrigeration equipment to the retailers at no cost, provided the equipment was only utilized for Budweiser products,” investigators said in the report.
While financial arrangements for visibility are common in some industries, such as the grocery business, they are forbidden in the alcohol sector in most states. That ban harkens to post-Prohibition laws aimed at preventing any one large beverage maker from controlling the chain of manufacturing and sales.
AB InBev said in a statement that it has been working with the alcohol commission since Massachusetts first raised questions. “We believe that we lawfully provided branded point-of-sale items to retailers and plan to contest these allegations,” the company said.
The scrutiny comes at the same time that mainstream beer manufacturers and the exploding craft-beer segment are increasingly jostling for customers, creating unprecedented tension in the industry nationwide, said beer consultant Bump Williams.
“Shelf space is limited; display space is limited; cooler space is limited,” said Mr. Williams. “Getting that share of mind and getting that share of wallets is intense as I’ve ever seen it.”
by: Justin Kendall
As expected, two North Carolina breweries have filed a constitutional challenge to a state law that requires breweries producing more than 25,000 barrels annually to contract with a wholesaler.
Olde Mecklenburg and NoDa breweries, acting under the Craft Freedom LLC corporate banner, followed up their pledge last month to pursue legal action by filing a lawsuit today accusing the state of North Carolina of engaging in “economic protectionism.”
The plaintiffs’ attorneys, Bob Orr and Drew Erteschik, released a joint statement today echoing those sentiments:
“Today, we filed a lawsuit challenging a set of unconstitutional laws that punish our State’s craft breweries for their hard work and success. Our clients are small craft breweries that are subject to arbitrary laws forcing them to hand over their self-distribution businesses, distribution rights, brand control, and future profits to private distributors. These laws violate multiple provisions of the North Carolina Constitution, including those that prohibit the government from taking private property from one person and giving it to another. Our lawsuit asks the courts to hold that these laws cannot be enforced against our clients, and we look forward to vindicating their constitutional rights in court.”
The lawsuit argues that “franchise laws leave the breweries powerless in an oppressive and illusory ‘contractual’ relationship with no recourse. Craft brewers who question their distributors’ efforts face the real and legitimate prospect of the distributor intentionally ignoring that craft brewery’s brand and promoting competing brands — effectively extinguishing the craft brewery’s business. The craft brewery, meanwhile, has no remedy. Craft brewers have no choice but to submit to their distributors’ will, or else face financial ruin.”
The complaint seeks a permanent injunction of the laws.
Read the full story here.
by Justin Kendall
May. 9, 2017:
New allegations of illegal pay-to-play activities within the beer industry have resurfaced in Boston.
A 14-month investigation by the Massachusetts Alcoholic Beverages Control Commission (ABCC) into a wholly owned Anheuser-Busch wholesaler has resulted in charges that the beer distribution company illegally provided nearly $1 million in free equipment to retailers, according to the Boston Globe, who first reported the story.
On Tuesday, the ABCC accused A-B’s Medford-based wholesaler, August A. Busch & Co. of Massachusetts, with providing free Budweiser-branded coolers and draft equipment to bars and liquor stores – a prohibited practice known as inducement – between 2014 and early 2015 for use specifically with the beer company’s products.
The ABCC said giving the coolers and draft equipment to retailers violated section 204 CMR 2.08 of Massachusetts General Laws, which states:
“No licensee shall give or permit to be given money or any other thing of substantial value in any effort to induce any person to persuade or influence any other person to purchase, or contract for the purchase of any particular brand or kind of alcoholic beverages, or to persuade or influence any person to refrain from purchasing, or contracting for the purchase of any particular brand or kind of alcoholic beverages.”
A hearing with the ABCC has been set for June 20.
Source: Houston Chronicle
Texas: House tightens reins on Texas breweries
by Ronnie Crocker
May 6, 2017
The Texas House on Saturday voted overwhelming to place new constraints on craft breweries that grow beyond a set size or become acquired by a larger beer company.
Supporters of House Bill 3287 also fought back efforts to amend the legislation to give craft brewers the right to sell some beer on site for consumers to take home – something the smaller brewers have tried to secure for years.
HB 3287, blasted as anti-competitive by critics, is opposed by the Texas Craft Brewers Guild and Anheuser-Busch InBev as well as pro-business groups and a conservative Texas think tank.
“Now we prepare for the Senate battle,” guild executive director Charles Vallhonrat said after the vote.
A 2013 package of laws gave breweries that produce less than 225,000 barrels of beer annually to sell up to 5,000 barrels directly to customers, who must drink the beer in the taproom before they leave.
From Chris Furnari – Brewbound
Anheuser-Busch InBev is making its first U.S. craft brewery purchase of 2017, today announcing the acquisition of North Carolina’s Wicked Weed Brewing.
Specific financial terms of the transaction were not disclosed and the deal is subject to regulatory approval. Recall that last year, the U.S. Department of Justice promised to “carefully scrutinize any future craft acquisitions” by A-B.
“We have chosen to partner with The High End to position ourselves to make Wicked Weed what we imagined it could be when we first sat at a craft beer bar and talked about opening a brewery,” co-founder Walt Dickinson said via a press release. “As a brewer, giving our team more resources to continue innovating our portfolio and the ability to reach more craft drinkers, allows us to keep putting the beer and the people first.”
Wicked Weed, based in the popular craft beer-soaked mecca of Asheville, North Carolina, is the 10th U.S. craft brewery to sell to Anheuser-Busch InBev since 2011. It joins Goose Island (Chicago), Blue Point Brewing (New York), 10 Barrel Brewing (Oregon), Elysian Brewing (Seattle), Golden Road (Los Angeles), Breckenridge Brewery (Colorado), Four Peaks Brewing (Arizona), Devils Backbone (Virginia) and Karbach Brewing (Texas), in A-B’s craft and import focused “High End” portfolio.
Matthew McLaughlin, Esq. Awarded 2017 Brewers Association F.X. Matt Defense of the Craft Brewing Industry Award
by D. Taylor Harper
Craft Beer Attorney Coalition member, Matthew McLaughlin, Esq. of McLaughlin, PC and the Mississippi Brewers Guild, was awarded the 2017 Brewers Association F.X. Matt Defense of the Craft Brewing Industry Award at the annual Craft Brewers Conference that took place April 11th-13th in Washington, D.C..
This award is named for the late F.X. Matt, president of the F.X. Matt Brewing Co. in Utica, N.Y., from 1980-1989, and a tireless and outspoken champion for the small brewing industry. Nominations are open to individuals who have given aid and support to the causes of small, independent brewers, and by doing so have supported the Brewers Association’s goal of vigorously defending the craft beer industry.
Matthew serves as General Counsel for the Mississippi Brewers Guild and was instrumental in helping draft a bill to update state laws that would allow direct-to-consumer sales for small brewers among other items in the bill language.
This is the second member of the CBAC that has been awarded this prestigious BA award. In 2015, Brook Bristow of Bristow Beverage Law and the South Carolina Brewers Guild also received the F.X. Matt Defense of the Craft Brewing Industry Award.
Visit our website at:
NOTE: Nothing in these blog posts constitutes legal advice, and no attorney-client relationship is created with anyone reading or responding to blog content.
See our other blogs on:
(Beverages at Law)
(Employment Law: News and Notes)
Real Estate (The Latest Dirt)