Wine,Wine Business,Wine Legislation

Yesterday I Asked. Today We have Answers, and It’s Not Pretty

Yesterday, I was struck by how much money is being spent on lobbyists in the wine and spirits industry. I just knew something was fishy in Denmark.

Here’s what I wrote in my final analysis, after I listed all the money and who is spending it:

When you click on any of these links, don’t expect to find any real details. This is all just general spending, with no specifics. I’d love those details, like, what was spent on which particular programs, and into who’s pockets did the money land.

In other words, who’s getting all this money and for what bills to be written to benefit wholesalers…

Today, what Wine Business delivered dropped my chin to the floor. You can click here for the entire story, but here’s the gist of what shocked me.

TITLE: House Subcommittee on Courts and Competition Policy Holds Hearing on Legal Issues Concerning State Alcohol Regulation

SUBTITLE: Beer Wholesalers Seek to Repeal Constitution to Protect Economic Interests “Outrageous Wish List” Includes Exemption from Anti-Trust Law

Are you asking yourself, “WHAT?” yet?

THE GIST, quoting from Wine Business: “While some industry observers had known for weeks that beer wholesalers were “shooting for the moon” in an attempt to prevent any reform of the three-tier system, yesterday’s hearing on “issues, concerning state alcohol regulation,” caught many by surprise. Some felt blindsided. The hearing seemed to come right out of left field….

IT GOES ON: Rep. Bobby Rush, first to speak called the subcommittee’s decision to review regulation of alcoholic beverages “wise” and necessary “in light of the 2005 Granholm Supreme Court case (on direct shipping).” Rush also said that the three-tier system is “under attack” in his home state of Illinois where the Illinois Liquor Control Commission denied a wholesaler license to the world’s largest brewer, who had been seeking to buy a Chicago a distributorship. (A-B has since filed litigation and in an ironic twist, is arguing that the state has discriminated against it in violation of the Granholm decision.)

Now we know who’s in on this one, and we know that they’re shooting for a monopoly…

Okay, the icing on the cake…

“…the wish list includes: having Congress grant the States an antitrust exemption; allowing state laws to override federal and Constitutional mandates; having Congress overturn a 40 years of judicial decisions; and allowing states to be relieved from having to prove that their own laws are constitutional.”

This is what’s going on behind closed doors, as we sip our wine, beer, and spirits.

I find a statement from the Wine Institute very enlightening, and gives me a much deeper respect for everyone who works there. Remember, the WI is the wine industry’s lobby group. They not nearly as well funded, but they are definitely the voice of reason.

From the Wine Institute:

States’ rights to regulate wine and alcohol granted by the 21st Amendment are not absolute. Court decisions over the last 40 years balance state authority with important Constitutional rights, such as the Commerce Clause, Due Process and the First Amendment. The landmark U.S. Supreme Court case, Granholm vs. Heald, reaffirmed state rights under the 21st Amendment to regulate wine and alcohol, but correctly ruled that these rights do not supersede other provisions of the Constitution.

To protect their economic interests, the National Beer Wholesalers Association (NBWA) is asking Congress to grant states unlimited power to pass laws dealing with wine and alcohol. States have never had this power before and there should never be laws passed that grant license to a state to create and perpetuate an environment of discrimination and inequality.

NBWA is also asking for anti-trust immunity to protect its state-mandated monopoly distribution. This will result in reduced competition, and harm to wineries, distilleries, breweries and retailers. Equally important, this effort by beer wholesalers to stunt competition and gain power over producers will limit consumer choice.

State laws should encourage, rather than stifle, competition and any effort to control prices or distribution should not be immune from the Sherman Act and other antitrust principles. State-mandated monopolies and other anti-competitive provisions that deal with wine and alcohol should always be subject to antitrust review.

The wholesalers are using this hearing as a stage for introducing legislation to further protect their monopoly distribution system by putting them out of reach of nothing less than the U.S. Constitution and antitrust laws. No other business sector has been extended this level of immunity. This would be an unprecedented power shift with major constitutional consequences that will be opposed by those who care about free trade and our nation’s 6,700 wineries.

Well, ask and ye shall receive, but I didn’t think it would be as shocking as this, did you?

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2 Responses to “Yesterday I Asked. Today We have Answers, and It’s Not Pretty”

  1. Tom Wark has been doing great reporting on this at Fermentation blog.

  2. Jo says:

    Jose also told me to read Tom Wark about this. Today’s story is in great detail.

    Clowning Around With Wine: http://fermentation.typepad.com/fermentation/2010/03/clowning-around-with-wine-.html

    It is unconscionable that this reality exists. I was talking to an importer today to told me that he’s glad bloggers are taking this on, because he, too, has to deal with the lawlessness within the three tiered system.

    I just can’t believe how this is all unfolding.

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