Anheuser-Busch has agreed to pay $5 million in an Offer In Compromise (OIC) reached with the Alcohol and Tobacco Tax and Trade Bureau (TTB), the agency that regulates the trade and importing of alcohol, tobacco, and firearms within the United States. This is the largest OIC ever collected by the TTB for trade practice violations, topping last year’s $2.5 million reached with Heineken USA.
The Offer In Compromise, which is essentially a fine, was made in response to the TTB’s allegations that AB violated trade practices related to sports and entertainment sponsorships. According to the TTB, the violations of the Federal Alcohol Administration (FAA) Act occurred between 2016 and 2018.
I am not sure what kind of matrix is used to determine the size of these kinds of fines, but it is obviously not intended to be punitive in the corrective sense of the word. Although $5 million may sound like a lot of money, it is a very small drop of beer in a very big bucket for a company the size of AB. If the goal is to correct this kind of behavior, the punishment would need to have a lot more teeth.
According to a press release from the agency, “TTB remains committed to putting an end to anti-competitive practices that negatively impact law-abiding businesses and prevent consumers from enjoying a wide selection of products.”
In addition to the $5 million, Anheuser-Busch’s importer permit and wholesaler permit were both suspended for two days in Littleton, Colorado, and four days in Denver.
Brewbound, which has reported on the situation, describes the alleged violations like this:
- “Entering into sponsorship agreements with various entities in the sports and entertainment industries requiring concessionaires and other retailers to purchase A-B’s malt beverages and prohibiting them from purchasing specific competitor brands;
- Inducing sports industry concessionaires to purchase A-B’s malt beverages by furnishing fixtures, equipment, and services;
- 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;
- Requiring retailers to purchase A-B’s malt beverages in return for such retailers’ use of equipment A-B furnished them free of charge or below market value;
- Using third parties (business entities and payment services) to provide money or things of value to retailers in exchange for placement of A-B’s malt beverages; and
- Paying retailers purportedly for items such as consumer samplings, when, in fact, the retailers did not receive the goods or services purportedly purchased, and such payments were actually for A-B product placement.”