Alcohol Justice, the antialcohol activist group, urged California Attorney General Xavier Becerra to launch full-scale investigation of recent actions in the state by Anheuser-Busch InBev (ABI).
Alcohol Justice said it believes ABI is in violation of California’s Cartwright Act and federal antitrust statutes, case law, and a 2018 federal court consent agreement.
If ABI is allowed to takeover Ace Beverage, just two companies — ABI and Reyes Holdings — would control an estimated 85% of the wholesaler market in California, Bruce Lee Livingston, Alcohol Justice’s CEO, said in a letter to Bacerra.
ABI is already the dominant producer in California, Livingston’s letter says, adding that if ABI acquisiton of Ace is allowed to stand, ABI:
- Potentially (can) get inside information on retail activity at nearly every store, on-sale ABC licensee, or small producer.
- Lower and raise beer prices at will.
- Offer generous promotions and swag to retail tier purchasers to force out competitive brands.
- Make it difficult for craft brew producers to get onto their trucks, while under lock-down conditions the craft brew industry is already suffering great economic stress.
- Diminish distribution market share for any remaining independent distributors, forcing them out of business or forcing them to sell their assets and routes to ABI at deep discounts.”
Alcohol Justice Board President Richard Zaldivar, the founder of The Wall – Las Memorias (a community-based health prevention non-profit), said, “The diverse population of Los Angeles is already suffering from the COVID-19 pandemic and does not need cheap beer products in our neighborhoods or struggling mom and pop small business retailers under the thumb of a global corporation like Anheuser-Busch InBev. The middle tier of beer distribution in Los Angeles needs protection from unfair business practices.”
The Alcohol Justice letter raises the possibility that ABI’s recent acquisitions in California and its dramatically expanded market position could violate the spirit, if not the actual letter, of the October 2018 US District Court for the District of Columbia final judgement and order.
The decree “precluded [ABI] from acquiring beer distributors … without allowing for (U.S. Justice) department review of the acquisition’s likely competitive effects.
ABI agreed to that consent decree to purchase the world’s second major beer producer, SAB Miller-Coors. The court-approved settlement decree is supposedly monitored by the federal government to prevent over-concentration and undue influence by the behemoth manufacturer.
“The intent of that federal settlement was made clear by the US Department of Justice in their July 2016 news release, namely to “prevent any increase in concentration in the U.S. beer industry,” and to “preserve the ability of
smaller brewers … to compete against ABI by protecting their access to important distribution networks.” The goal of the July 2016 decree was to preserve the right of “independent distributors that sell ABI’s beer [to] have the freedom to sell and promote the variety of beers that many Americans drink,” Lington’s letter says.
“Alcohol Justice believes that California’s antitrust law – the Cartwright Act, other statutes and case law – are relevant and being violated,” added Livingston. “And therefore, it is appropriate for Attorney General Becerra to investigate and prosecute, even if a federal response does not occur from the Department of Justice.”