Anheuser-Busch to Pay Record $5 Million Offer In Compromise for Trade Practice Violations

Discussion in 'Beer News & Releases' started by Todd, Jul 9, 2020.

  1. Todd

    Todd Founder (6,148) Aug 23, 1996 California
    Staff Moderator Fest Crew Society

    Here's the list of alleged violations:
    • “Entering into sponsorship agreements with various entities in the sports and entertainment industries requiring concessionaires and other retailers to purchase A-B’s malt beverages and prohibiting them from purchasing specific competitor brands;
    • Inducing sports industry concessionaires to purchase A-B’s malt beverages by furnishing fixtures, equipment, and services;
    • Reimbursing, through credit card swipes, retailers for the cost of installing malt beverage draft dispensing systems, thereby inducing them to purchase A-B’s malt beverages;
    • Requiring retailers to purchase A-B’s malt beverages in return for such retailers’ use of equipment A-B furnished them free of charge or below market value;
    • Using third parties (business entities and payment services) to provide money or things of value to retailers in exchange for placement of A-B’s malt beverages; and
    • Paying retailers purportedly for items such as consumer samplings, when, in fact, the retailers did not receive the goods or services purportedly purchased, and such payments were actually for A-B product placement.”
  2. beertunes

    beertunes Poo-Bah (7,689) Sep 24, 2007 Kiribati
    Society Trader

    Same old shit.

    And some folks still wonder why some of us refuse to buy their products.
  3. John_M

    John_M Poo-Bah (6,773) Oct 25, 2003 Oregon
    Moderator Society Trader

    Agreed. Some of this is new to me, but none of it comes as a surprise. I've always had the impression that AB-Inbev does whatever it feels it can get away with to get ahead. If they get caught, they pony up the fine amount, court settlement or whatever, and just move on (with little or no change in their behavior). For AB-Inbev, this sort of charge off is just part of the cost of doing business.
    Jaycase, TJM, jakecattleco and 10 others like this.
  4. beertunes

    beertunes Poo-Bah (7,689) Sep 24, 2007 Kiribati
    Society Trader

    And, they probably made more than the punishment amount to begin with.
  5. Scottsbeer

    Scottsbeer Crusader (751) Nov 3, 2017 Florida

    So is AB InBev kickbacks and collusion a big problem in Mayotte?
  6. cavedave

    cavedave Poo-Bah (2,979) Mar 12, 2009 New York
    Society Trader

    Glad they got caught, hope it leads to some increased scrutiny and better enforcement.
  7. MNAle

    MNAle Poo-Bah (1,937) Sep 6, 2011 Minnesota

    I seem to remember just about every one of those things (or something closely resembling it) is how the Coca Cola Company became #1. Exclusive concessionaire contracts are SOP in the non-alcoholic beverage business.
  8. jesskidden

    jesskidden Poo-Bah (2,092) Aug 10, 2005 New Jersey
    Society Trader

    But that's because the soda pop industry is not regulated by a Federal "Tied House" law.
    #8 jesskidden, Jul 9, 2020
    Last edited: Jul 9, 2020
    Alexmc2, KentT, rgordon and 4 others like this.
  9. MNAle

    MNAle Poo-Bah (1,937) Sep 6, 2011 Minnesota

    Yes, I know. I was just pointing out that, while it can be illegal for one and not the other, it is not anti-competitive or monopolistic or evil for one and not the other.
  10. unlikelyspiderperson

    unlikelyspiderperson Poo-Bah (1,563) Mar 12, 2013 California
    Society Trader

    No its anticompetitive, monopolistic, and evil for both. One is just free from harmed consumers seeking recourse
    Jaycase, KentT, cjgiant and 2 others like this.
  11. MNAle

    MNAle Poo-Bah (1,937) Sep 6, 2011 Minnesota

    Then make sure you complain the next time you buy a Big Mac and can only order Coca Cola products to drink.
  12. jesskidden

    jesskidden Poo-Bah (2,092) Aug 10, 2005 New Jersey
    Society Trader

    I do! But the only responses I ever get are:

    (1) "Uh, OK. Would you like a Apple Pie with that order?"
    (2) "That'll be $7.67 - please drive up to the first window."

    I did send the Corporation an email a few years ago when they dropped their Orange Drink :astonished: a beverage (assumed to be a Coca-Cola product) I'd been buying for over 50 years. A McDonald's "meal" just ain't the same without it, even if I usually went years between visits.

    I was shocked a few years ago when I ordered and they gave me a !@#$ empty paper cup. "Is this some kind of a joke!" No, I had to pour my own. WTF. If I got hurt (slipped on some crushed ice over by the germ-laden pop machine), would I be able to collect Workman's Comp?
  13. WillieThreebiers

    WillieThreebiers Poo-Bah (6,319) Apr 26, 2012 Connecticut

    Or better yet, stop drinking Coke and Bud...
  14. officerbill

    officerbill Zealot (572) Feb 9, 2019 New York
    Society Trader

    I remember in Germany that bars only sold one brand in exchange for glasses, furnishings, equipment, etc. In Frankfurt most bars only sold Binding or Henninger beers, there were scattered neighborhoods where every bar sold Schultheiss or DAB. IIRC Holland was the same way. Each brewery put out several styles (our local was a Binding bar with premium, export, Dunkel, and at least one seasonal on tap) so there was something for everyone.
    No one seemed put out about it since it allowed a person to open a bar with (relatively) little money which resulted in more small neighborhood bars within walking distance of where you lived.
    Enverde, KentT, Bitterbill and 3 others like this.
  15. unlikelyspiderperson

    unlikelyspiderperson Poo-Bah (1,563) Mar 12, 2013 California
    Society Trader

    Well for a whole host of reasons I don't make.those purchases and so it isn't a personal harm to me. Except for its externalized costs in culture and public heath.

    Interesting take on it. I'd be more interested in an approach where government facilitated entrepreneurship by inhibiting the formation of monopolies in the first place
    officerbill and cavedave like this.
  16. woodchipper

    woodchipper Meyvn (1,275) Oct 25, 2005 Connecticut

    Ha, $5 million. From Wikipedia "annual sales for the company in 2019 were US$52.3 billion".
    Just to put that in graphic perspective-
  17. John_M

    John_M Poo-Bah (6,773) Oct 25, 2003 Oregon
    Moderator Society Trader

    Exactly. This barely qualifies as a drop in the bucket in terms of affecting their bottom line. There is virtually no hope or likelihood of this changing their behavior one iota.
  18. Soneast

    Soneast Champion (833) May 9, 2008 Wisconsin

    About like me paying a dime for a speeding ticket. :rolling_eyes:
  19. officerbill

    officerbill Zealot (572) Feb 9, 2019 New York
    Society Trader

    Good point. There were local monopolies and beers which dominated regionally, but nothing we would consider to be a ”national” brand and certainly no brand with the reach and clout of AB, MC, or even SA since the Germans preferred beer brewed in or near their city or from their hometown.

    Be glad you don't live in Finland where the fee is based on your income. The head of Nokia once had to pay over $103,000 for a speeding ticket.
    DCH, Lucular, Bitterbill and 2 others like this.
  20. billandsuz

    billandsuz Devotee (451) Sep 1, 2004 New York

    You want to know who gets boned by AB?
    Me. Weekly. A small fine is not going to change anything. This bullshit is baked into the business model. The three tier system was intended to eliminate the influence of major players and create a level field while also allowing for a simple window for regulators and revnoors to view. It has become an obvious failure in many regards.

    My partner and I operate a small draft beer installation business. I can't compete with free folks. Distributors, which are AKA AB-Inbev (or MolsonCoors) will provide a system for the cost of equipment. Happens all the time. Occasionally they get caught and pay a small fine.

    They work out a payment scheme. And they don't do it because they are your friend. When you accept $12,000 in a system install you also get into bed with the mob, and you better be carrying their product in the majority of those parking spaces.

    Plus the system is a slam job.
    Plus there is no back end support.
    Plus there is no input from the bar owner.
    Plus there is no tax paid on free labor.

    It's a God Damned shit show. We get boned. Uncle Sam gets boned. You get crappy draft beer and limited selection. You get the latest crap-ola the shirts in marketing want to shove down your throat. The distro needs to move that crap-ola and guess where it is going? Yep, right into one of those 12 lines you graciously got for free. Argue with it and you will find your other orders are mysteriously MIA. So sorry. We will take care of it next week...

    We are just trying to serve good draft beer and we are competing with a multi billion dollar system that breaks the law as a matter of course. Every day. For years.

    Good news is that there are plenty of good bars that are on to this scam and they find us frequently. But it is frustrating to deal with.
    That is my rant and it is all 100% true.

    #20 billandsuz, Jul 10, 2020
    Last edited: Jul 10, 2020
    DCH, Jaycase, KentT and 10 others like this.
  21. billandsuz

    billandsuz Devotee (451) Sep 1, 2004 New York

    Nope. Not the same.
    • Coke and Pepsi are not selling a legal beverage through the three tier system.
    • Coke and Pepsi are not selling through a distro which is the de facto tax collector for the government.
    • Coke and Pepsi are not subject to alcohol laws and 50 different state regulations.
    • Coke and Pepsi do not sell through a government sanctioned monopoly that requires a license.
    • Coke and Pepsi do not require long term contracts that are virtually impossible to break.
    • Coke and Pepsi sell one primary product, Cola.
    • Coke and Pepsi service their accounts fairly reasonably; there are options. Limited but they exist. AB Inbev and MolsonCoors account for 85% of every beer sold.
    There is no reasonable comparison to be made.
    And there is also this.
    Beer is food. Coca Cola is something else entirely.

    PapaGoose03 and beertunes like this.
  22. MNAle

    MNAle Poo-Bah (1,937) Sep 6, 2011 Minnesota

    All the things you listed are legal differences, which I acknowledged. There is no anticompetitive, monopolistic, or good vs evil difference.
  23. MNAle

    MNAle Poo-Bah (1,937) Sep 6, 2011 Minnesota

    There is a simple first step that does not involve the Feds at all or hiring a bunch of expensive investigators.

    AFAIK, any state can choose to make this change in the law.

    Do away with franchise laws as they pertain to beer distributorships. Make the brewer-distributor arrangement a simple business to business contract, with an expiration date and simple termination clauses with and without cause (IOW, either side can terminate with specified costs, etc., not just for non-performance).
    #23 MNAle, Jul 10, 2020
    Last edited: Jul 10, 2020
    officerbill and JackHorzempa like this.
  24. jesskidden

    jesskidden Poo-Bah (2,092) Aug 10, 2005 New Jersey
    Society Trader

    Not anymore - based on BMI figures quoted by the Brewers Association, they put the combined market share of the US Big Two at under 2/3 for 2019.

    AB InBev - 39.9%
    MillerCoors - 22.6%

    (That 85% figure sounds like their share of the beer brewed in the US - so minus imports. With both of them brewing domestically as well as importing some of their parent companies' brands brewed elsewhere - and some brands switching from import to domestically-brewed (Bass, Beck's, St. Pauli Girl, Molson Golden and XXX, etc), that figure takes some math to figure out these days...:wink:)
    Enverde, Jaycase, beertunes and 4 others like this.
  25. billandsuz

    billandsuz Devotee (451) Sep 1, 2004 New York

    I was actually hoping you had the numbers. Math is risky and I avoid it if I can. Thanks.
    beertunes and Bitterbill like this.
  26. officerbill

    officerbill Zealot (572) Feb 9, 2019 New York
    Society Trader

    Coke and Pepsi are selling a legal beverage through state licensed and regulated local/regional distributors, some of whom are also bottlers and many of whom also distribute beer

    In NYS the distributors are responsible for collecting the deposit and forwarding the state it's share
    Distributors of non-alcoholic beverages have exclusive license to sell those products wholesale in their territory, if you want to sell Adirondack seltzer in your store, there's only one place you can get it
    Coca Cola sells 28 separate beverage brands in the US, Pepsi sells 22; that's not counting all of the brand sub categories (diet, caffeine free, flavored, etc)
    There is some limited competition at the shelf level, mostly from store brands (43% Coke & 25% Pepsi for non-alcoholic carbonated beverages), but I truly can not remember the last time I was at a restaurant or bar that served anything other than Coke or Pepsi products (not counting breweries that make their own sodas) and I'd wager their share of the bar/restaurant market is at least 90%. Coke & Pepsi have a market share that ABInbev and MolsonCoors can only dream of.

    I get what you're saying, but on the wholesale/distribution side beer and soda are very similar and “big soda” has even more clout than “big beer”.
  27. jesskidden

    jesskidden Poo-Bah (2,092) Aug 10, 2005 New Jersey
    Society Trader

    42 years ago, different owners and managment, most everybody who was there at the time is dead or long retired...but still a company tradition.

    (Remember that anti-drug commercial where dad finds the kid's dope?
    "Who taught you to do this?" "You did!")

    The DoL's Inflation Calculator says $750k in 1978 dollars is a little over $3 million today - so the current fine is still tops.:grin:
    cjgiant, beertunes, cavedave and 4 others like this.
  28. SFACRKnight

    SFACRKnight Poo-Bah (1,776) Jan 20, 2012 Colorado
    Society Trader

    I'm glad I am not the only one lamenting the loss of the orange hi c at macdonald's. Also, come grocery shopping at my local Kroger, you can earn a pension bagging your own stuff.
    KentT, Prep8611 and beertunes like this.
  29. beertunes

    beertunes Poo-Bah (7,689) Sep 24, 2007 Kiribati
    Society Trader

    And still waaaayyyy too smol.
    unlikelyspiderperson likes this.
  30. keithmurray

    keithmurray Meyvn (1,411) Oct 7, 2009 Connecticut

    Im sure they spill more beer than that per month
  31. semibaked

    semibaked Zealot (596) Mar 27, 2007 Illinois

    Funny how the sports and entertainment venues aren’t fined for participating in this illegal activity.
    KentT likes this.
  32. rgordon

    rgordon Meyvn (1,086) Apr 26, 2012 North Carolina

    In my experience those that receive free goods talk about it and attempt to leverage their graft for your business. "But the Bud guys gave me free kegs". I heard this all of the time. It was always motivation for me.
  33. ilikebeer03

    ilikebeer03 Meyvn (1,134) Oct 17, 2012 Texas

    If the benefit is greater than fine/risk, then it is no longer a penalty. Just a good investment.
  34. cjgiant

    cjgiant Poo-Bah (5,293) Jul 13, 2013 District of Columbia

    Lol - having been a grocery store cashier, I actually like this innovation (which was in the works when I left the grocery industry 20 years ago).

    At least there aren't beer places that have you fill your own beer.

  35. SFACRKnight

    SFACRKnight Poo-Bah (1,776) Jan 20, 2012 Colorado
    Society Trader

    Baggers have been cut all together. They push you towards the self checkout. I had an employee roll her eyes at me when I walked up to her lane. She explained self checkout had no line, I explained I was trying to keep her employed.
    Enverde, Spikester, TJM and 5 others like this.
  36. JackHorzempa

    JackHorzempa Poo-Bah (4,694) Dec 15, 2005 Pennsylvania

    I have an opposite story. I went to my local post office (I have not been there in a while) and while waiting in line to buy stamps I see a self service kiosk which was not there last time I went. I said to myself: why wait in line when I can use a self service kiosk. I went through the series of screens to make my purchase with the last step being the credit card transaction but the stupid machine gave me a 'reject' message. I tried one more time and once again 'reject'. I turned around to see that the line got longer during the time I was playing with the machine. I got into the (longer) line and eventually I purchased my stamps from an employee using my credit card. At the end of this transaction I made mention to the woman that I tried to buy the stamps using the self-service kiosk but it rejected my credit card. Her response (which I did not expect) was: "Well, then we would not get a chance to see you then". She said this with a smile which I interpreted that she happy to help me. As I drove home I wondered if there was any 'foul play' to render the self-service kiosk to not work properly. Not likely since this would require effort by a federal employee?

    SFACRKnight likes this.
  37. KentT

    KentT Aspirant (241) Oct 15, 2008 Tennessee

    Should have been $5 Billion $$ $or even $5 Trillion $$$.
    unlikelyspiderperson likes this.
  38. MNAle

    MNAle Poo-Bah (1,937) Sep 6, 2011 Minnesota

    One of the side effects of ever higher minimum wage.
    DCH, officerbill and PA-Michigander like this.
  39. WunderLlama

    WunderLlama Poo-Bah (2,590) Dec 27, 2010 Massachusetts
    Society Trader

    A $5 million dollar Fine to Budweiser is the equivalent of a $5.65 fine to the average person in the US ($59039). That is pocket change and not a deterrent to future criminal activity.
    KentT and unlikelyspiderperson like this.
  40. Ffenski

    Ffenski Initiate (135) Apr 24, 2008 Ohio

    I've seen a lot of comments regarding how minimal this fine is, so let's talk about who is imposing the fine. The TTB obviously is aware of annual revenue numbers for ABInBev. They have to realize that a fine of that amount would have very little effect on both the balance sheet and as a deterrent of future illegal behavior. So why would they impose such a relatively small fine? I think we all know why. I would like more details on who made the decision on the amount (yes I want names) and explicit statements on why they settled on a measly $5,000,000 fine for clearly monopolistic practices that have been stifling and continue to stifle so many smaller brewers (pretty much every brewer). I want accountability. Again, I think we all know what is going on. I would like to see how much Bud Light is in these decision-makers' garages. And the Super Bowl/Final Four/World Series/front row to X artist tickets they have received.