Reyes Holdings hit with antitrust lawsuit by Seismic Brewing Co.

Discussion in 'Beer News & Releases' started by BuffaloBill12, Apr 13, 2022.

  1. BuffaloBill12

    BuffaloBill12 Initiate (147) Oct 21, 2011 Illinois

    Reyes Holdings LLC, the top U.S. beer distributor, is facing federal antitrust litigation in San Francisco over claims made by Seismic Brewing Co. that it is "threatening to decimate the craft beer industry by forcing 'onerous' contract terms on brewers and retaliating against those that resist." This follows a similar lawsuit filed against large wine/liquor distributors a couple weeks ago. Will be interesting to see if either of these cases goes anywhere.
  2. NeroFiddled

    NeroFiddled Poo-Bah (13,096) Jul 8, 2002 Pennsylvania
    Society Trader

    I'm not surprised by this, but I doubt it will go anywhere. Firstly we have Reyes "exploiting its size and clout to buy out rivals in the California market. As far as I am aware that is not illegal.

    Then it's claimed that they're using "sham" contract assignments to lock brewers into deals that make it "virtually impossible" for them to switch to competing wholesalers. This is nothing new, and I've dealt with this myself. You need to read the contract and understand what it entails. If you don't like it, don't sign it - but again, it's not illegal in any way.

    Then there's this: “When Seismic refused,” Reyes and other distributors “conspired to retaliate against Seismic and others who did not fall in line” by instituting “bounties” that encouraged salespeople to go after their “permanent ‘tap handle’ placements” at bars and restaurants. This also happened to me. Once a large distributor realized that I had picked up a fair amount of tap handles in their area they convinced ALL of my customers to drop me at once. What that does is slap you down and make you think that you can't get back into that market, and to be honest, you kind of can't. But is that illegal? Technically no, it's certainly not illegal to have your sales team go out and try to get those tap handles back. They will, however, use illegal tactics to do so, but how can you prove it? A friend of mine owned one of the bars in question and told me straight up that his sales rep ate lunch there at least once a week if not more and asked if I could do that. Nope, not on my budget. There's nothing really illegal about that, but then he also told me that he couldn't get the special beers that he wanted if he didn't pour the select beers that they wanted him to. Is that illegal? Kind of... but not really... they have excuses. Try to prove it in a court of law. On top of that, if something like that ever went to court and my friend had been called in as a witness I can guarantee you that he would have kept his mouth shut because his business is more important than fighting to make things right and the large distributors wield a lot of power. Sad but true.
  3. unlikelyspiderperson

    unlikelyspiderperson Poo-Bah (2,037) Mar 12, 2013 California
    Society Trader

    If it's an antitrust claim wouldn't it hinge on proving that Reyes had become so large that it had a de facto monopoly on distribution?
  4. NeroFiddled

    NeroFiddled Poo-Bah (13,096) Jul 8, 2002 Pennsylvania
    Society Trader

    Yeah, but prove it. There are other distributors involved. That's not a monopoly. They're most likely strong armed by Reyes as well but it takes an enormous effort to get everyone to stick their necks out and pull together to make anything happen.
  5. unlikelyspiderperson

    unlikelyspiderperson Poo-Bah (2,037) Mar 12, 2013 California
    Society Trader

    My reading was that those other distributors named in the suits are ones who sold out (allegedly under duress) to Reyes. Presumably, someone involved from those breweries may be willing to testify to actual illegal activity. But I definitely take your point of how hard it is to prove these types of cases.
    ChicagoJ and BuffaloBill12 like this.
  6. NeroFiddled

    NeroFiddled Poo-Bah (13,096) Jul 8, 2002 Pennsylvania
    Society Trader

    If everyone stands up I can see it working but I doubt that will happen. The law is never black and white, only grey due to interpretation, but contracts and sales ARE black and white in the eyes of the law and proving the grey part of what's happened with those will be hard to do.
    unlikelyspiderperson likes this.
  7. unlikelyspiderperson

    unlikelyspiderperson Poo-Bah (2,037) Mar 12, 2013 California
    Society Trader

    Ya, definitely reads like the only allegations that have a shot at being provable relate to the purchase of those competing distributors.
  8. Giantspace

    Giantspace Savant (942) Dec 22, 2011 Pennsylvania

    Some friend.

  9. PatKorn

    PatKorn Initiate (184) Aug 30, 2007 Oregon

    Reyes is the Devil. Fucking Scumbags.
  10. jesskidden

    jesskidden Poo-Bah (2,426) Aug 10, 2005 New Jersey
    Society Trader

    "Monopoly" (defacto or not :wink:) is not the primary concern of the Anti-Trust Div. in the DoJ - they'd say it's mostly consumer price protection from a lack of true competition. The DoJ agreement with InBev which allowed them to take over Anheuser-Busch required the company to sell off the US rights to Canadian brand, Labatt, because of Labatt's market share in NY State (Michigan, too, to some extent).

    Combining AB and InBev/Labatt in NYS would have meant a market share of 50% - 60% in upstate markets like Buffalo, Rochester and Syracuse. But outside of those medium sized cities in that one state, Labatt's total market share in the US was pretty insignificant.
  11. unlikelyspiderperson

    unlikelyspiderperson Poo-Bah (2,037) Mar 12, 2013 California
    Society Trader

    Well that seems to bolster the case against Reyes. The article reported 50% market share in CA, which is more considerable than upstate NY I would think, and I would guess that the claim made would be that this predatory behavior forces breweries to raise prices to stay competitive
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