Q: Who’s Really Calling The Shots At IL Distributor City Beverage?

In Beer News by Ryan

A: Anheuser-Busch.

abinbev

Up until today we knew that Wholesaler Equity Development Corporation (WEDCO), a wholly owned subsidiary of Anheuser-Busch, held a minority stake in City Beverage but what we didn’t know is that they were essentially running the show.

“The facts are that City Beverage is commonly owned and managed by Anheuser-Busch LLC, and Illinois Non-Resident Dealer, through its affiliate WEDCO.”

– Richard Haymaker, Chief Legal Counsel, Illinois Liquor Control Commission, Motion To Amend Complaint, July 18, 2012

Documents, released this morning by the Illinois Liquor Control Commission, show that while WEDCO had minority ownership it also had majority management.

In total nine documents were made public, including a few we already had. Most are supporting materials submitted by both Anheuser-Busch InBev and the legal counsel for the Commission in defense, and support, of a citation issued by the ILCC to force WEDCO to give up its 30-percent ownership interest in City Beverage.

The ILCC contends that it is against Illinois law for WEDCO to hold even a minority interest in an Illinois distributor. The Commission cites a bill signed in to law last year that defines a “Craft Brewer” in Illinois as evidence. But AB InBev says the Commission is misinterpreting the law and that distributor ownership was not the intent of the legislation.

The most damning of the documents that was released today is ILCC Chief Legal Counsel Richard Haymaker’s motion for summary judgement. In it he unveils WEDCO was elbow deep in the day-to-day activities of City Beverage (sub-heading c).

Haymaker’s assertion is supported by a signed affidavit from ILCC Licensing Administrator Dusanka Marijan, who reviewed documents submitted in 2010 for a management change at City Beverage.

In those documents (snapshot below) it is revealed that WEDCO had majority control over the appointment of City Beverage board members and approval of managers. WEDCO also had at least partial, if not whole control over buying or selling distribution rights, territories and brands for all four City Beverage locations. And WEDCO would have an option in 2013 to increase its ownership interest in City Beverage to 51% and an option in 2019 to buy City Beverage outright.

Marijan, in his affidavit, also notes that WEDCO has not submitted an application to change or update its records since 2010 so one can assume that this management structure is still in place.

We alluded, in our last two posts on this matter, that Haymaker had amended his citation against WEDCO and Anheuser-Busch. The amended citation, which has been partially redacted, adds the allegation that City Beverage is not only owned by an unauthorized interest but is managed by one too.

The motion for summary judgement, which is attached below, provides a fascinating glimpse in to Anheuser-Busch’s involvement, through WEDCO, in four Illinois distributors.

There are nine more documents to pour through, which we’ll do this afternoon, and add any relevant information here or in a separate post.

We also plan on creating a home for all of these documents for those looking for some hefty, but intriguing legal reads.

[gview file=”https://www.guysdrinkingbeer.com/wp-content/uploads/2012/08/MotionForSummaryJudgment.pdf”]

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About the Author

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.