Beer Shenanigans

Major beer distributors in California are renewing their efforts to use public law to carve up the state into exclusive districts in which they would have, in effect, monopoly status. It is bad legislation, but the fact that it has already won overwhelming bipartisan support in one Assembly committee demonstrates how fast and free special interests can ride in Sacramento when their way is well lubricated with generous campaign contributions.

Perhaps the most annoying element of the campaign to pass AB 1500 is that it is being promoted as a consumer aid by Assemblyman Jim Costa (D-Fresno), the author. He argues that “the consumer effects of the bill are positive,” and that “prices will remain stable.” How he knows this is not clear. About the best thing that the promoters can say is that the existing distribution system in the state, with 90% under privately enforced exclusive territories, has resulted in prices that are among the lowest in the nation. There is no guarantee that low prices would survive a 100%-controlled monopoly market.

This bald move to restrain competition in the name of public interest is not new. Indeed, those who handle alcoholic beverages have a particular propensity for the measures. Fortunately, they have largely failed in California. They failed two years ago with an almost identical beer bill, thanks to the refusal of the Ways and Means Committee to give approval. But the wine and spirits people won approval by the Legislature of similar legislation protecting their products in 1985, and the state was spared the bill only by the willingness of Gov. George Deukmejian to veto it as a restriction of competition, which it surely was.

The big beer distributors are also trying to justify AB 1500 as a protection for small stores and pubs that might otherwise have trouble getting the beer that they want. Come now. There are adequate laws to protect small business interests. That claim fails to camouflage the real intent of using the power of the state to create and protect monopolies and to snuff out what little competition remains in the beer trade.

“This is probably the most embarrassing bill this committee will see this year,” an official of Consumers Union told the Governmental Organizations Committee. So it is. The embarrassment did not deter the majority of 10 from overwhelming the minority of 3 to move the bill out of committee. Alas.