U.S. Regulators Make an Example of Craft Brewers Guild Over ‘Pay-to-Play’
Photo via iStock.com / Stu99
Decision makers at the U.S. Alcohol and Tobacco Tax and Trade Bureau have settled with the local beer distribution company accused of violating anti-competition laws, known as “pay-to-play.” The TTB announced today that Craft Brewers Guild has paid an unprecedented $750,000 fine, the Boston Globe reports.
The Globe‘s Dan Adams has been on the pay-to-play beat since the Massachusetts Alcoholic Beverages Control Commission first brought the allegations to light last fall. The Everett-based distributors are currently fighting a $2.6 million fine from the local regulators, Adams reports today, but Craft Brewers Guild paid the feds “in compromise.”
The parent company of Craft Brewers Guild, Sheehan Family Cos., has said it did indeed pay tens of thousands of dollars to Boston bars to carry its beers, at the expense of other brands, but also that it’s a widespread practice in the industry. But as the Globe notes, today’s update indicates the TTB isn’t having it anymore.
“This is not something I intend to walk away from. You’re going to see further investigations in this area,” Trade Investigations Division director Robert Angleo told the Globe. “I would hope that industry members take notice of this, and take notice of the fact that this is a very significant [settlement]. I don’t want industry members to consider getting caught the cost of doing business. I want them to realize there are significant consequences if we catch you committing slotting fee violations.”
Whether bans on “pay-to-play” tactics in the alcohol industry are fair—the Globe has noted the practice is legal in other industries—depends on the beholder’s interests. Small and medium craft brewers are firmly against it. Case in point: High-end importer Shelton Brothers Inc. has filed a $1.7 million lawsuit against Craft Brewers Guild in hopes of “[freeing] our products from being held hostage,” which CBG is contesting.
Not to mention, Night Shift Brewing has expanded into its own distribution company, and is playing by its own rules.
