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Beer distributor sues Mass. over record fine

Mar 14 | Posted by: Danielle Elks

And you thought the fines issued by the Tennessee Alcoholic Beverage Commission was tough! According to the Boston Globe, the Massachusetts Alcoholic Beverage Control Commission assessed a $2.6 MILLION fine last week against Craft Brewers Guild for paying kickbacks to retailers for shelf placement of its products. This practice of course is prohibited within the alcoholic beverage industry, but is common within the retail industry. The TABC may have to consider expanding its investigations to this issue when wine can be sold in grocery stores beginning July 1, 2016....If you find yourself having been issued a fine by the TABC, contact ELKS LAW for assistance. www.ElksLaw.com

Beer distributor sues Mass. over record fine

Source: Boston Globe
By Dan Adams
March 12, 2016

Craft Brewers Guild, the Everett beer distributor that illegally paid Boston bars to stock its products, has sued Massachusetts regulators, questioning the process that resulted in the company paying a record $2.6 million fine last week.

The beer distributor filed suit in Suffolk Superior Court Thursday to get the findings of the state Alcoholic Beverages Control Commission overturned or reconsidered, or its penalty reduced. The ABCC found Craft Brewers Guild spent around "$120,000 to pay kickbacks," in some cases through shell companies, to a dozen Boston-area bars "in a pervasive illegal enterprise."

In February, the ABCC gave the company the option of shutting down for 90 days or paying a fine. An ABCC spokesman Friday said Craft Brewers Guild has paid the $2.6 million.

The lawsuit alleges a state attorney failed to pass along key documents to the three ABCC commissioners who decided the case. Craft Brewers Guild also said the ABCC erred in calculating the fine.

Craft Brewers Guild also argued that competing wholesalers engaged "in the exact same conduct" yet were not similarly charged. The ABCC recently said it is investigating other allegations of so-called pay-to-play practices. Craft Brewers Guild also asserted that changes to the state's alcohol laws made years ago by courts and the Legislature had rendered the ban on pay-to-play invalid.

State authorities said a distributor violated a rule against inducements for retailers to stock its products over those of competitors.

"Craft [Brewers Guild] challenges the ABCC decision as unsupported by evidence and asserts certain portions of the state liquor law are invalid," the company said in a statement. "Further, the lawsuit challenges the size and scope of the penalty as unreasonable and unwarranted."

An ABCC spokesman declined to comment, saying the commission had not yet seen the lawsuit.

Craft Brewers Guild has said it does not dispute the ABCC allegations, and acknowledged as much in its lawsuit.

"Through the investigatory process, the [ABCC] identified certain trade practices as problematic," the suit said. "Craft immediately ceased all such practices.''

Craft Brewers Guild is owned by the Sheehan Family Cos., which is based in Massachusetts and operates 19 beer distributors in 13 states. The Globe reported last week that another Sheehan subsidiary had plied retailers in New York with gifts such as TVs and draft systems.

Paying for product placement is common in retail, but the practice was banned in the alcohol industry by most states decades ago, to keep large national brands from dominating local markets.

Critics have long complained the practice is rampant in the US beer industry but seldom punished. The ABCC's harsh penalty for Craft Brewers Guild is its first-ever enforcement of the pay-to-play ban, and officials said it was intended to send a message to the industry.

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