US: Anheuser-Busch InBev's battle continues over stake in Chicago distributor
A-B InBev could be forced to sell its stake in City Beverage, its largest distributor in Chicago
Anhesuer-Busch InBev could be forced to sell its 30% stake in its largest distributor in Chicago, as a long-running legal battle enters a new chapter next week.
A hearing is due to be held by the Illinois Liqour Control Commission next Wednesday (20 June), which could see Chicago distributor City Beverage have its licence revoked, unless A-B InBev sells its stake in the firm. The case dates back to 2010 when City Beverage went up for sale and A-B InBev attempted to take full ownership of the distributor.
However, ILLCC ruled the sale could not go through as A-B InBev is based outside the state.
Instead, investment firm BDT Capital, owned by former Goldman Sachs vice-chairman Byron Trott, took majority control of City Beverage, one of the US's biggest beer wholesalers.
A-B InBev filed a lawsuit challening the decision and a federal judge referred the matter to the General Assembly to clarify the rules. New laws were then made that banned in-state and out-of-state brewers from self-distribution.
As a result, three Illinois drinks trade bodies argued it was illegal for A-B InBev to hold even a minority stake in City Beverage.
In the latest twist, a citation was delivered to City Beverage last Friday (8 June) requesting the company appears before ILCC next week for a hearing. According to the citation, seen by just-drinks, the company has been asked to show why its licence "should not be fined, suspended, or revoked for violation of the Illinois Liqour Control Act".
Nobody from City Beverage was avaiable for comment.
Gary Rutledge, A-B InBev's vice-president and general counsel North America, said the company is "reviewing the content of the citation and will be working with City Beverage on a response".
He added: "Anheuser-Busch has made significant long-term business decisions and investments in Illinois based on the law and the ILCC’s long-standing practice of permitting brewers to own or maintain interests in licensed distributors.
"In fact, in the past three decades, the ILCC issued Anheuser-Busch and its affiliates distributor licences for nine different locations and issued more than 50 annual renewals of those distributor licenses."
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