Judge upholds $2.6m fine against US wholesaler

5th October, 2017 by Lauren Eads

A Massachusetts judge has upheld a decision to impose a $2.6 million fine against US wholesaler Craft Beer Guild after it was found to have made “pay to play” payments to distributors in the Boston area.

An investigation into Craft Beer Guild began in October 2014 with the Massachusetts Alcoholic Beverages Control Commission (ABCC) finding that the US wholesaler,  which distributes more than 200 craft brands throughout the state, had paid bars about $120,000 over a two-year period from 2013 to 2014 for tap handle placements.

During a hearing, Craft Beer Guild admitted to paying up to $2,000 per tap handle and as much as $20,000 annually for “committed lines.”

In February 2016, the ABCC gave the Craft Beer Guild, a subsidiary of Sheehan Family Companies, the choice of a 90-day license suspension or a $2.6m fine after it concluded that the company had “engaged in a pervasive illegal enterprise involving numerous retailers and corporations that spanned at least five years.”

Having made payments to 12 licensees in the Boston are, the ABCC said the company had “gone to great lengths to hide its knowingly unlawful conduct”.

The Craft Beer Guild initially said it would pay the fine, in lieu of the suspension, but later appealed the decision in March of 2016, claiming that “the penalty, including the fine, was unlawful and require it to be reduced, refunded or, alternatively, recalculated and reduced.”

This week a Superior Court judge upheld the decision, dismissing the Craft Beer Guild’s argument that the legislature had invalidated “regulatory enforcement of the anti-[price] discrimination” law, as reported by the Boston Globe.

In a statement released on Tuesday, the ABCC said it was “very pleased the court agreed with our original ruling”, while the Craft Beer Guild has said it is is “reviewing the court’s ruling” with an appeal still possible.

A further hearing is scheduled for November 28.

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