Anheuser-Busch InBev pays $5 million to settle trade practice violation allegations
Anheuser-Busch InBev has agreed to pay $5 million to settle charges that it violated alcohol industry trade practice laws, including using sports and entertainment sponsorships to prohibit retailers and concessionaires from purchasing products from competitors.
The alleged violations—which occurred at an unnamed stadium in Denver and two Colorado mountain resorts—involve federal laws that prohibit alcohol companies from providing anything of value to incentivize retailers to buy their products. The rules are meant to maintain the industry’s “three-tier” system that dates to the post-Prohibition era and is aimed at separating suppliers, retailers and distributors.
The $5 million settlement, announced today by the Alcohol and Tobacco Tax and Trade Bureau, is significant for its size and the signal it sends to other large alcohol companies. It more than doubles the $2.5 million agreement the TTB struck with Heineken USA last spring for similar violations, which at the time was by far the largest settlement over such a matter reached by the bureau, according to industry trade publication Beer Marketer’s Insights. The allegations against AB InBev “include classic examples of the kind of pay-to-play practices that industry members grumble about in private, but rarely receive much public scrutiny,” Beer Marketer’s reported today.
“It gives ammunition to the folks who are arguing ... that the big brewers still have way too much clout in the market, it kind of gives them a bloody shirt to wave,” Beer Marketer’s Executive Editor Eric Shepard said in an interview. Smaller craft brewers, in particular, are likely to seize on the ruling. “It will be used to bang on the big guys,” Shepard said. But he added, “I don’t know what that means for the average consumer,” especially with fewer people even visiting stadiums and resorts, as businesses struggle to re-open during the coronavirus pandemic.
The allegations against AB InBev date back to a marketing agreement struck in 2016 involving the Denver stadium, according to the TTB. While the purchase of advertising rights by the brewer “was in no way conditioned upon” a retailer’s purchase of AB InBev’s products, employees of the brewer “allegedly enforced an unwritten expectation” that an unnamed retail concessionaire “purchase and provide favorable placement” of AB InBev’s beers, according to TTB documents.
TTB in its announcement also alleged that the brewer engaged in other prohibited activities, like “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.”
AB InBev in a statement said it “has always maintained the highest standards of business integrity and ethics including working closely with regulators as we have done in this instance. Our commitment to operating in full compliance with alcohol beverage laws and regulations includes regular reviews of our operations and we have recently implemented several enhancements to our compliance programs including a strategic training initiative, new communication tools, and leveraging data and analytics.”