WEDCO & City Beverage, The Findings – UPDATED

In Beer News by Ryan

There appears to be a hint of light at the end of the tunnel in the months long dispute over Anheuser-Busch InBev, its wholly owned subsidiary WEDCO and distributor City Beverage.abinbev

The squabble centers around whether WEDCO can legally retain a 30-percent stake in City Beverage in light of legislation signed in to law last year that clarifies who can and who cannot self-distribute beer in Illinois and if WEDCO holding a minority stake in the distributor is akin to self-distribution.

Friday, the Illinois Liquor Control Commission released of a series of findings – agreed upon by commissioners – after a hearing on the issue back in December. You can find the findings below, if you’d like to give them a once-over.

According to a spokesperson for the commission the findings “can” be used to determine the next steps. And those next steps could come sometime over the summer. This jives with the expectations of Associated Beer Distributors President Bill Olson, who says the commission will likely issue a directive based on these findings – which he thinks could come as early as June.

But, according to the commission spokesperson, there is no set timeline for the commission to reach a final decision.

And it would appear they have some time. City Beverage Arlington Heights, Chicago and Markham have September and October renewal dates for their distributor and importing distributor licenses. You would think the commission would want to act by then, but in March City Beverage Bloomington’s licenses were renewed even though a resolution had not been reached. Perhaps the renewal date is not the best barometer.

To find out what is we reached out to a few beverage industry legal-types to get their thoughts on the findings. We’re still waiting to hear back from them so, in the meantime, we’ll pass along a few observations of our own.

Generaly speaking, the findings seem pretty – general. The first few set a base timeline – until we get to finding (E) – which reads;

“Two attorneys, each functioning respectively as Chief Counsel to the Illinois Liquor Control Commission, within a period of 5 years, came to opposite conclusions as to whether the Liquor Control Act allowed manufacturer ownership of distributorships, while the statute had not changed during the intervening time.”

Those two attorney’s would be Rick Haymaker and William O’Donaghue.

We checked with the commission to ensure we had the names, titles and years employed correct. As the saying goes; you can’t tell a Chief Counsel of the Liquor Control Commission without a program. Well, sure enough, we were correct.

Mr. Haymaker is still in that capacity with the commission.

Mr. O’Donaghue, on the other hand, is now a partner at Kubasiak, Fylstra, Thorpe & Rotunno, P.C. in Chicago – where, according to a source, Anheuser-Busch InBev has him on retainer. And if you followed our Save The Craft coverage last year then you may recall that Mr. O’Donaghue also lobbied on behalf of AB InBev to defeat self-distribution rights for small brewers in Illinois and – in turn – retain AB InBev’s right to keep a stake in four Illinois distributors.

I think we’ve figured out which Chief Counsel came to the conclusion that it was okay for a manufacturer to own a distributor.

Finding (F) also caught our eye.

“It was the intent of the Illinois General Assembly in 2011 to deny AB the right to own a distributorship. We believe this even though the General Assembly did not amend Section 5/6-4(a) to include brewers as parties specifically prohibited from owning distributorships.”

This was worded a little oddly, or so we thought. Does the commission agree that the legislation signed in to law last year prohibits AB InBev from owning a distributor? Or are they agreeing with AB InBev in that, because Section 5/6-4(a) was not directly amended, a manufacturer can own a distributor?

According to ABDI President Bill Olson, after obtaining clarification from the commission, they are siding with the General Assembly. “In effect they are rejecting Anheuser-Busch’s argument and are agreeing with the intent of SB 754,” said Olson.

That’s not how AB InBev is reading in to this. In a statement from AB General Counsel Gary Rutledge, the brewing giant all but claimed victory.

“Anheuser-Busch maintains its 30 percent interest in City Beverage, a licensed Illinois distributor, in accordance with Illinois law. Our ownership has helped bring competition to the beer market in Chicago and has supported expanded choices in beer.

We received the May 10 findings by the Illinois Liquor Control Commission and will continue holding our minority stake interest in CITY Beverage.”

The remaining findings, generally, outline what the commission has the ability to do under the circumstances.

So we sit, and we wait, till the commission meets again. Until “Directive Day” is upon us.

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Ryan

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Equal parts beer nerd and policy geek, Ryan is now the curator of the Guys Drinking Beer cellar. The skills he once used to dig through the annals of state government as a political reporter are now put to use offering unique takes on barrel-aged stouts, years-old barleywines and 10 + year verticals.