Alcoholic Beverage Control Reaches $400K Settlement With Anheuser-Busch for Illegal Business Practices

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Following a yearlong investigation that began in 2015, the Department of Alcoholic Beverage Control (ABC) of Sacramento announced last week that it reached a $400,000 settlement with Anheuser-Busch wholesalers. The settlement, imposed for Anheuser-Busch’s engagement in unfair business practices with retailers, includes one of the largest penalty fines imposed in the agency’s history, ABC said.

Along with the settlement with Anheuser-Busch, ABC reached a second, $10,000 settlement with Straub Distributing Company, an alcohol distributorship that distributes Anheuser-Busch products to retailers in Orange County. Additionally, ABC sanctioned 34 retail licensees for participating in the illegal scheme.

According to a statement released by ABC, which is a Department of the Business, Consumer Services, and Housing Agency, ABC’s Trade Enforcement Unit found that Anheuser-Busch had been covering costs or partially financing equipment and other valuable materials to dozens of retailers in the Southern California area. Providing these materials, which included refrigeration units, television sets, and draught systems, ABC said, is against the law and leads to unfair advantages over other wholesalers.

After inspecting more than 100 retailers within Anheuser-Busch’s distributorship in Sylmar, Pomona, Carson (Beach Cities), and Riverside, the Unit also found that Straub Distributing Company, which distributes Anheuser-Busch products in Orange County, also engaged in similar illegal activity.

“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,” said Ramona Prieto, acting director of the Trade Enforcement Unit. “I appreciate the wholesalers’ renewed commitment to training, education, and restructuring of their business practices as means of ensuring compliance with the law.”

The $400,000 fine, while being one of the largest ever imposed in ABC’s history, “more importantly focuses on the training and transparency necessary to promote a safe and fair economic marketplace,” the agency said.

Part of the settlement with Anheuser-Busch is that the wholesaler must provide training to its employees, both new and current, regarding the administration of a rental or lease program of Anheuser-Busch refrigeration equipment. In addition, the Department requested that Anheuser-Busch provide evidence of the training.

Financially, the settlement shakes out with Anheuser-Busch immediately paying $200,000 to the ABC, while the other $200,000 remains in escrow for three years. Should A-B comply, the second sum will be returned. In exchange, Anheuser-Busch agreed to extend the conditions of the settlement to all its wholesalers in the state of California. In the event that they fail to comply, the Anheuser-Busch wholesale license could be suspended.

For more information on ABC programs, visit abc.ca.gov.