Beer Bill Passes Kentucky Senate: "Anheuser-Busch Wants a Monopoly"

The Kentucky Senate passed legislation Wednesday banning breweries from owning beer distribution networks – a move expected to force Anheuser-Busch to sell its two Kentucky distributorships.

The legislation, known as House Bill 168, passed with a 23-13 vote – ending what has been dubbed the “beer wars” in the General Assembly. HB 168 would affirm that the state’s three-tier system of regulating alcoholic beverage producers, distributors and retailers applies to beer.

“HB 186 is about the three-tier system in regards to alcohol distribution in the state of Kentucky,” said Sen. John Schickel (R-Union). “A three-tier system specifically prevents interlocking ownership between the tiers. The three-tier system prevents monopolies, but to be effective, the tiers must be independent of one another.”

He said 37 other states have endorsed the three-tier system and none of those governments has given into Anheuser-Busch’s request to deregulate the beer business.

“Anheuser-Busch wants a monopoly, not a free market,” Schickel said. 

He said a diverse group of special interests joined forces to support HB 168. The groups included breweries such as Yuengling & Son and MillerCoors, business groups like the Bowling Green Area Chamber of Commerce and the Greater Lexington Chamber of Commerce, and the Temperance League of Kentucky.

“HB 168 is perfectly consistent with the historical approach Kentucky has taken with alcohol regulation,” Schickel said. “For good reason, the alcohol beverage industry has always been highly regulated. That goes all the way back to Prohibition when the alcohol industry was taken over by organized crime. When we came out of Prohibition, we wisely established the three-tier system in Kentucky.”

Opponents to the bill included Sen. Julie Raque Adams (R-Louisville). Anheuser-Busch owns one of its two Kentucky distributorships in Louisville.

“Make no mistake; House Bill 168 is a punitive bill that seeks to punish Anheuser-Busch,” she said. “It retroactively takes from Anheuser-Busch what they lawfully obtained. It will require divestiture of its assets. This bill is the ultimate assault on private property rights.”

She said no one in the chamber could claim victory with the passage of HB 168, especially when it comes to Anheuser-Busch’s almost 200 employees, many of whom live in and around the district she represents in Louisville.

Sen. Joe Bowen (R-Owensboro), also spoke out against the bill. He lives in the city where Anheuser-Busch’s second distributorship is located. He said HB 168 “pulls the rug out from under” Anheuser-Busch.

“This bill tinkers with the free market,” Bowen said. “It tinkers with the laws and structures of a free-market economy. It is in violation of the laws of a free market.”

He said its “inappropriate” for the state Senate to intervene on what he characterized as a business dispute. Northern Kentucky Senators Schickel, Chris McDaniel (R-Taylor Mill), and Wil Schroder (R-Wilder) supported the measure while in the House the bill received aye votes from Reps. Joe Fischer (R-Ft. Thomas), Tom Kerr (R-Taylor Mill), Sal Santoro (R-Florence), Arnold Simpson (D-Covington), Diane St. Onge (R-Lakeside Park), and Addia Wuchner (R-Florence). Reps. Dennis Keene (D-Wilder) and Adam Koenig (R-Erlanger) opposed the bill.

Bill supporter Sen. Julian M. Carroll (D-Frankfort), gave a floor speech that contained a history lessons on beer distributorships in Kentucky When Carroll was governor in 1978, he said his administration wrote regulations to preserve the three-tier system after Anheuser-Busch purchased its first distributorship in Louisville. That system was again jeopardized when a court ruled last year that Anheuser-Busch could own the second distributorship in Owensboro.

“I apologize for my failure to take care of this problem in 1978,” Carroll said, “and ask for forgiveness.”

Governor Steve Beshear said in a statement released Wednesday that he would sign the bill.

“I will be pleased to sign House Bill 168, which protects the integrity of the three-tier system for alcohol sales in Kentucky. This system was designed to protect consumers as well as small producers like new breweries," Beshear said. "This aligns the rules for beer with rules for other alcoholic beverages, so everyone is on a level playing field.” 

-Staff report with notes from the Legislative Research Commission

Photo via Wiki Commons