{"id":8179,"date":"2012-10-31T14:34:38","date_gmt":"2012-10-31T19:34:38","guid":{"rendered":"http:\/\/www.guysdrinkingbeer.com\/?p=8179"},"modified":"2018-02-06T14:22:20","modified_gmt":"2018-02-06T20:22:20","slug":"abdi-chides-il-liquor-control-commission-on-city-beverage-decission","status":"publish","type":"post","link":"https:\/\/www.guysdrinkingbeer.com\/abdi-chides-il-liquor-control-commission-on-city-beverage-decission\/","title":{"rendered":"ABDI & WSDI Chide IL Liquor Control Commission Over City Beverage Decission"},"content":{"rendered":"

\"\"<\/a>The Associated Beer Distributors of Illinois, a vocal opponent of Anheuser-Busch’s minority ownership of City Beverage, is taking the Illinois Liquor Control Commission to task over its decision today to allow A-B to retain its 30-percent interest in the Illinois distributor.<\/p>\n

In a press release emailed shortly after the decision was announced, ABDI President Bill Olson called the move a slap in the face to the three-tier system.<\/p>\n

\u201cThis ruling impairs Illinois\u2019 authority to regulate alcohol beverages.\u00a0 Without independent distributors in the State\u2019s three-tier regulatory system, a brewer could influence every aspect of the sale of beer in the State,\u201d said Olson.<\/p>\n

During the months-long hearing on City Beverage it was revealed that while A-B, through its wholly owned subsidiary WEDCO, had a minority ownership interest in City Beverage it had majority control. That control included the appointment of the majority of City Beverage board members and<\/em> approval of managers as well as partial, if not full control, over the buying or selling of distribution rights, territories and brands for all four City Beverage locations.<\/p>\n

The Illinois Liquor Control Commission’s legal counsel, the ABDI and other distributor groups have long contended that the passage of the “Craft Brewer Act” last summer prohibited a brewer from owning a distributor.<\/p>\n

“It is not the Liquor Control Commission\u2019s purpose to accommodate ABI\u2019s [Anheuser-Busch InBev’s] global business plan and ignore the intent of SB 754 as passed by the Illinois General Assembly,\u201d said Olson.\"\"<\/a><\/p>\n

Karin Matura, Executive Director of the Wine and Spirits Distributors of Illinois echoed Olson’s sentiment.<\/p>\n

“Wine and Spirits Distributors of Illinois, an association of family-owned businesses, obviously is disappointed in the Illinois Liquor Control Commission\u2019s decision to allow Anheuser-Busch, which though controlled for years by international conglomerate InBev remains the largest brewer in the United States, to retain its 30% interest in and control over CITYBeverage, an Illinois licensed distributor.”<\/p>\n

The concern of both organizations is does today’s decision could go well beyond City Beverage, creating a dangerous precedent in Illinois?<\/p>\n

\u201cNow that ABI is allowed to own distributorships, craft brewers, new imported brands, and new domestic brands will have reduced access to market.\u00a0 Independent distributors provide an avenue for those products to reach consumers that brewery-owned distributors won\u2019t provide,\u201d said Olson.<\/p>\n

ABDI Press Release:<\/p>\n

\n

Despite Law Change Anheuser-Busch InBev Allowed To Hold Interest in Illinois Distributorships <\/strong><\/p>\n

Illinois Liquor Control Commission Approves Anheuser-Busch InBev\u2019s 30%<\/em><\/p>\n

SPRINGFIELD, IL \u2013 October 31, 2012\u00a0\u00a0 In a 4-2, decision, the Illinois Liquor Control Commission (Commission) ruled today that Anheuser-Busch Inbev (ABI) may continue to hold an interest in four Illinois distributorships.\u00a0\u00a0 Despite a law enacted in June 2011, which prohibits brewers from owning beer distributorships (brewery branches) in Illinois, the Commission ruled in favor of the large international conglomerate brewer.<\/p>\n

Today\u2019s decision by the Commission allows ABI to maintain an interest in City Beverage distributorships through an Anheuser-Busch Inbev affiliate, WEDCO.\u00a0 \u201cThe large brewer could play a substantial role in the day-to-day operations of the four beer distributorships,\u201d said Bill Olson, president of the Associated Beer Distributors of Illinois (ABDI).\u00a0 \u201cOnly independent distributors create competition, are easy to regulate, and are a vital part of the local communities they service,\u201d he continued.<\/p>\n

\u201cThis ruling impairs Illinois\u2019 authority to regulate alcohol beverages.\u00a0 Without independent distributors in the State\u2019s three-tier regulatory system, a brewer could influence every aspect of the sale of beer in the State,\u201d said Bill Olson.<\/p>\n

By issuing the order, the Commission has taken upon itself to create public policy despite the Legislature’s intent.\u00a0 Judge Dow stated in his decision in Anheuser-Busch v. Schnorf, \u201c\u2026 the regulation of the distribution of liquor is a matter of public policy and a quintessential legislative function.\u201d (Decision p. 35).\u00a0 This public policy was determined in the Legislature and was clarified in a statement of legislative intent (a statement read into the record during legislative debate) when the sponsor stated “\u2026all brewers, in-state and out-of-state\u2026may not self-distribute or own a distributorship in Illinois.”<\/p>\n

The Liquor Control Commission\u2019s ruling to allow Anheuser-Busch InBev (ABI) to have an ownership interest in a distributorship is an example of the regulatory process run amok.\u00a0 The Commission has demonstrated, through its actions, that it wanted to maintain control of this issue so it could create public policy.\u00a0 A regulatory action, which could have been addressed in a few months, has taken one year and five months since the Governor signed SB 754 into law.\u00a0 Because of the slow, drawn-out process, concerns are raised regarding the Commission’s ability to effectively regulate alcoholic beverages in a timely manner.<\/p>\n

\u201cNow that ABI is allowed to own distributorships, craft brewers, new imported brands, and new domestic brands will have reduced access to market.\u00a0 Independent distributors provide an avenue for those products to reach consumers that brewery-owned distributors won\u2019t provide,\u201d continued Bill Olson.<\/p>\n

In most other countries where ABI operates, it controls the distribution of its products.\u00a0 Passage of the 21st<\/sup> Amendment to the U.S. Constitution gave the right to regulate alcohol beverages to the states.\u00a0 Every state created a regulatory system which prohibits vertical integration.\u00a0 The U.S. Supreme Court has stated that the three-tier regulatory system is \u201cunquestionably legitimate.\u201d<\/p>\n

\u201cToday\u2019s decision weakens Illinois\u2019 regulatory authority as granted by the 21st<\/sup> Amendment to the U.S. Constitution. Alcohol distribution outside the U.S. is handled differently.\u00a0\u00a0 When InBev bought Anheuser-Busch, they also bought into the system of alcohol regulation in the U.S.,\u201d said Olson.\u00a0 \u201cIf they were unaware of how beer distribution is regulated in the U.S., they didn\u2019t do their due diligence.\u00a0 It is not the Liquor Control Commission\u2019s purpose to accommodate ABI\u2019s global business plan and ignore the intent of SB 754 as passed by the Illinois General Assembly,\u201d continued Olson.<\/p>\n

In February 2010, ABI requested the Commission permit the transfer of the licenses of four City Beverage distributorship locations to ABI as part of its purchase of City Beverage \u2013 Illinois.\u00a0 ABI (through an affiliate) had a 30% interest in the four locations and wanted to own 100% interest in the licenses.<\/p>\n

On March 10, 2010, the Commission held that ABI did not qualify for a distributor license on the grounds that out-of-state manufacturers are prohibited from holding an Illinois distributor license.<\/p>\n

Following the ruling, ABI immediately filed a complaint (AB v. Schnorf) in the US District Court Northern District of Illinois stating that the Commission\u2019s ruling violates the Commerce Clause of the Constitution by permitting in-state brewers to obtain a distributor license while prohibiting out-of-state brewers to do the same.\u00a0 The complaint further stated that the Commission interfered with ABI\u2019s contract to purchase City Beverages, and it did not interpret Illinois\u2019 alcohol code correctly or fairly.<\/p>\n

On September 3, 2010, Judge Dow rendered his decision that there was discrimination between in-state and out-of-state brewers because two in-state brewers were granted a distributorship license and ABI, an out-of-state brewer (Non-Resident Dealer) was denied that ability, the discrimination constituted a Commerce Clause violation.<\/p>\n

Judge Dow denied ABI\u2019s \u201crequest to remedy the unconstitutionally of Illinois\u2019s system by extending the self-distribution privilege to out-of-state brewers.\u201d\u00a0 He continued, \u201cThat remedy would be more disruptive to the existing statutory and regulatory scheme than the alternative remedy of withdrawing the self-distribution privilege from in-state brewers.\u201d<\/p>\n

Judge Dow stayed his opinion until March 31, 2011, \u201c\u2026in recognition of the General Assembly\u2019s ultimate authority over Illinois public policy, including a remedy for the constitutional defect \u2026.\u201d<\/p>\n

SB 754, a bill authorizing only small craft brewers, ones that manufacture less than 15,000 barrels of beer annually, self-distribution rights, passed and became law (P.A. 97-0005) on June 1, 2011.\u00a0 The craft brewer category was created to allow the two in-state brewers in the original action to self-distribute.\u00a0\u00a0 In passing SB 754, the Illinois General Assembly clearly made it public policy in the state of Illinois that brewers cannot hold a distributor\u2019s license.<\/p>\n

The Liquor Control Commission held a public meeting on December 7, 2011, in response to complaints by multiple Illinois liquor license holders and organizations that represent license holders.\u00a0 The Commission heard testimony on the following questions:<\/p>\n