August A. Busch & Co. of Massachusetts, a fully owned subsidiary of Anheuser-Busch (A-B), which in turn is part of AB InBev, has been accused by the Massachusetts Alcoholic Beverages Control Commission (ABCC) to illegally provide nearly $1 million in free equipment to retailers. Based on financial records, the company gave bar equipment such as draft systems, coolers, and refrigerators totaling a value of $942,200 to 442 alcohol retailers in Massachusetts in 2014 and 2015. ABCC stated in a report that “August representatives offered the refrigeration equipment to the retailer at no cost, provided that the equipment was only utilized for Budweiser products.”
Giveaways of this nature are considered illegal according to the ABCC because the practice violates section 204 CMR 2.08 of Massachusetts General Laws. The regulation states that “no licensee shall give or permit to be given money or any other thing of substantial value in any effort to induce any person to persuade or influence any other person to purchase, or contract for the purchase of any particular brand or kind of alcoholic beverages, or to persuade or influence any person to refrain from purchasing, or contracting for the purchase of any particular brand or kind of alcoholic beverages.”
The company responded to the allegations in an official statement to have “lawfully provided branded point-of-sale items to retailers” and that the company had “been working with the Massachusetts ABC since they first raised questions about permissible trade practices by wholesalers within the state.” Furthermore, the company ceased the marketing program after the ABCC first began questioning the wholesaler in 2015.
The key issue in this case seems to be, what is considered to be a substantial value according to the above stated section of Massachusetts General Laws. The investigation comprises 590 giveaways, which vary in value between $500 and $5.700. A hearing with the ABCC concerning A-B’s particular case has been set for June 20.
In this respect it is interesting to note that the Massachusetts Treasurer's office deployed a task force earlier this year to review Massachusetts’ decades-old alcohol laws and to provide suggestions for modifying elements of Chapter 138 (Alcoholic Liquors) of the Massachusetts General Laws.
This is not the first pay to play scandal for A-B. Two months ago, California’s Department of Alcoholic Beverage Control (ABC) announced a $400,000 settlement with A-B wholesalers in a very similar case, which was one of the largest penalty fines imposed in the agency’s history. Additionally, ABC reached a second, $10,000 settlement with Straub Distributing Company, an alcohol distributorship that distributes A-B products to retailers in Orange County and sanctioned 34 retail licensees for participating in the illegal scheme.
