It’s term paper day, of sorts, at the Illinois Commerce Commission.
Today, responses are due from the parties who attended last month’s hearing before the Illinois Liquor Control Commission to determine if Anheuser-Busch can keep it’s 30-percent stake in Chicago area distributor City Beverage. We previewed the hearing here and detailed the bombshell dropped during the hearing here. I know covering a deadline to file paperwork isn’t the sexiest thing to report – but we’ll do our best.
If you’ve made the New Year’s resolutions to click on fewer links, then we’ll tell you the bombshell dropped during the hearing, and subsequently confirmed by us, is that the company owned by A-B that holds the 30-percent stake in City Beverage isn’t registered to do business in Illinois.
Last month, A-B’s Vice President and General Counsel for North America Gary Rutledge, told us Wholesaler Equity Development Corporation – or WEDCO – doesn’t need to be registered here. “There is no requirement of law that WEDCO be registered with the Illinois Secretary of State’s Office,” said Rutledge. “WEDCO does not transact business in Illinois and its minority interest in City Beverage does not constitute ‘transacting business’ in the state. The allegation that WEDCO should be registered is nothing more than an effort to distract the Illinois Liquor Control Commission from the issue at hand.”
Au contraire, said Illinois Liquor Control Commission Sue Hofer. “The Liquor Control Act requires all owners and officers of a licensed corporation to qualify in the same way that the licensee corporation qualifies. Thus, WEDCO will likely have to become authorized to do business in Illinois because the licensee in which they are an investor is required to be an Illinois corporation,” said Hofer.
We reached out to the Illinois Secretary of State’s Office, who has in turn reached to A-B to inquire as to why is WEDCO not registered in Illinois. A-B still has a few weeks to respond to the inquiry. In the end, it will be up to that office to determine if A-B is required to register in Illinois and what penalties and fines the brewer will face if they have been operating in Illinois without going through the proper channels.
It’s a safe bet that the majority of the paperwork filed today will focus on the WEDCO registration issue. Our guess is A-B will need to defend itself, or at the very least try and deflect attention away from that. Those interested in forcing A-B out of its 30-percent share will surely be hammering away at the WEDCO registration – or lack thereof.
The Liquor Control Commission has not said when they will decide on the fate of A-B, WEDCO and City Beverage.
There is also a bit of side-drama playing out concerning Two Brothers Brewing and Windy City Distribution. The two are separate companies but up until the summer of 2011 had common ownership; something A-B made an issue of last year. And now a second party has piled on calling foul.
Here is what the hubbub is over. As you can see below (if you look real close) Jane Ebel is listed as an owner of both Two Brothers and Windy City.
Two Brothers:
“Jane Ebel 45%, Jason Ebel 45% & Other Shareholders 10%”
Windy City:
“Robert Collins 26.53%, Jane Ebel 23.47%, Jason Ebel 23.47% & Jane Ebel Trust 23,47%”
According to the new state law enacted this summer someone can’t hold a brewer’s license and a distributors license. A brewer can self-distribute if they meet certain qualifications, though – which Two Brothers does not. The case is being made that because of that, and because Jane Ebel is listed as an owner of both companies Two Brothers and Windy City are violating the Illinois Liquor Control Act.
But that paperwork is old. A search – today – of the Illinois Liquor Control Commission site reveals different owners.
Two Brothers:
Windy City:
Last year the Associated Beer Distributors of Illinois told us the licensing concerns with the two companies was a simple paperwork issue. On paper, then, this appears to be cleared up.
But, combined, the three of us have not gone to school long enough to venture a legal guess on this one. You could clearly argue that there is no common ownership because Jane Ebel is no longer listed as a part-owner of both Two Brothers and Windy City. On the other hand, we suppose you could raise an issue with the familial ownership because there are four different Ebel’s listed as owners between the two companies. Again, we don’t have an attorney on retainer to answer these questions for us so we’ll have to leave you hanging.
The ILCC would not confirm or deny that they are looking in to the Two Brothers/Windy City relationship; which most likely means they are.