FTC Staff Says Proposed Massachusetts Law Would Limit Competition and Raise Costs in Distribution of Malt Beverages

If adopted, the comment stated, the measure “would further impede competition in the distribution of malt beverages, and thereby harm competition and consumers.

5/19/2011 --- Federal Trade Commission staff, in a comment to Massachusetts State Representative Alice Peisch, advised against passage of Massachusetts House Bill 1871, which would impose new administrative requirements on the acquirer of a malt beverage brewer if it subsequently wants to terminate a wholesale distribution agreement that existed between that brewer and its wholesale distributor.

If adopted, the comment stated, the measure “would further impede competition in the distribution of malt beverages, and thereby harm competition and consumers.” For example, it would increase distribution costs by adding new administrative procedures and requiring the new wholesaler to buy the distribution rights from the former wholesaler unless the acquiring firm can prove that it has good cause under Massachusetts law for terminating the existing wholesale agreement.

The staff comment supported passage of alternative legislation introduced by Rep. Peisch. “Because H.B. 1897 avoids the additional restrictions on successor suppliers and would provide some relief [under current law] for ‘small brewer relationships,’ it likely would be an improvement over the current regulatory environment,” the comment stated.