Sunday, April 28, 2013

Where's the beer?

Anheuser-Busch objected to new bill .
Should brewers be able to purchase wholesale distributors in Ohio?

Shouldn't a free market allow anyone to purchase a distributorship in order to further distribute their products, especially beer?

Well, Ohio says no, according to a new law passed in a matter of hours two weeks ago.

Senate Bill 48 was introduced Feb. 20th and passed by the Senate on March 20th. It was sent to the House on March 21st.

On April 17th, the bill received a single hearing, a substitute bill was introduced and approved by the committee, then approved unanimously by the House and the Senate concurred. It was sent to the Governor on April 23rd.

On first examination, it looks like a good bill in that it sets up a two-tiered liquor licensing system that allows smaller brewers (making less than 31 million gallons a year) to sell directly to retail markets and bypass the wholesale distributors in the state.

It does a number of others things, but one aspect generated some controversy: it prohibits large brewers from owning a distributor.

And that was a problem for many, but especially Anheuser-Busch InBev which has numerous options to purchase, or determine the purchaser, of distributorships throughout the state.

So they objected to the terms of the bill - and the rapid process with which it was passed.

According to Rep. Jim Buchy, R-Greenville, the bill’s floor manager, "We want to maintain a good system that has worked so well so we don’t get into a noncompetitive situation. That’s what could happen here," he told the Columbus Dispatch.

Anheuser-Busch said they were not given any chance to comment upon the implications of the provision.

Interestingly, the Ohio Wholesale Wine and Beer Association, which is the direct beneficiary of the provision, has donated over $600,000 to various legislative and state campaigns in the past several years.

Anheuser-Busch's North American president, Luiz Edmond, met with Gov. John Kasich to see if he would veto the bill.

“This thing passed the House and the Senate unanimously,” Kasich said. “I’m not going to just veto something that has, basically, unanimous support across the board. I don’t see why I would do that," he told the Dispatch.

Scott Corbitt, Region Director for State Affairs at Anheuser-Busch, issued the following statement:

We have shared our concerns with legislators and Governor Kasich regarding the lack of transparency in the legislative process and that the legislation’s restrictions on competition and constraints on the free market will ultimately harm consumer choice. Positive assurances were given to us by policymakers to address the issues that could significantly impact our investments in the state. We are working to identify a solution that maintains consumer choice and the free market principles that make Ohio a great state to do business.

The Governor has until May 4th to sign or veto the bill, after which it will go into effect with or without his action.

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