California Fines Anheuser-Busch Wholesalers for Pay-To-Play

Austin Ray

THE GIST
California’s Department of Alcoholic Beverage Control has reached a $400,000 settlement with Anheuser-Busch, LLC wholesalers over the company’s illegal pay-to-play activities. The settlement, which includes “one of the largest penalty fines imposed in the history of ABC,” comes on the heels of a year-long investigation that found the distributors had been illegally paying for refrigeration units, television sets, and draft systems at Southern California retailers, the agency says. The company now must provide compliance training to current and new employees, while it has also agreed to “extend the conditions of discipline” statewide to reduce the fine by half.

“The investigative efforts of ABC’s Trade Enforcement Unit and the discipline imposed in these cases reflect the Department’s commitment to maintaining a safe and fair marketplace,” says the ABC’s acting director Ramona Prieto. “I appreciate the wholesalers renewed commitment to training, education, and restructuring of their business practices as means of ensuring compliance with the law.”

WHY IT MATTERS
Anheuser-Busch isn’t the only company the ABC is coming down on as a result of its investigation. The agency also reached a $10,000 settlement with Straub Distributing Company, while more than 30 retailers received unspecified disciplinary actions. But this is the second time in less than a year that AB has found itself embroiled in a pay-to-play scandal. To refresh, just last May, Anheuser-Busch was fined $150,000 for illegally paying two Seattle concert venues to exclusively sell products “supplied by a ‘Budweiser’ distributor,” allegations the company disputed at the time.

This time around, Anheuser-Busch says it’s going above and beyond what’s required of it to ensure proper observance of the law.

“First and foremost, we take trade practice compliance very seriously. We have fully cooperated with the California Department of Alcohol and Beverage Control and have addressed issues in a timely manner,” says Gemma Hart, the company’s vice president of communications, in a statement provided to GBH. “In mid-2016 we conducted an internal review of our equipment leasing in California. The agreement addresses the findings through several commitments, including enhanced employee training and setting up a system to manage the equipment lease process and payments that is independent from our sales operations. In fact, our commitments go above the conditions laid out in the agreement to include a larger set of employees receiving increased training.”

The pay-to-play issue, of course, is much bigger than one company, or even the world’s biggest brewery. Sparked by allegations, investigations, and subsequent fines in Boston a few years back, the pay-to-play discussion has grown louder in recent years and is being had all over the country by industry insiders and consumers alike.

That said, the ABC told the Voice of San Diego that it doesn’t plan on increasing enforcement of the pay-to-play rules, but rather will upkeep enforcement as it relates to its overall mission (which is in contrast to the federal government’s vow to crackdown on the issue specifically). Either way, it seems one of beer’s biggest dirty secrets is now entirely out in the open.

—Dave Eisenberg

READ MORE
State Regulators Crack Down on Beer Distributor Scheme [Voice of San Diego]
ABC Fines Two Large Beer & Wine Wholesalers and numerous Retailers for Unfair Business Practices [ABC]