Senate Approves Legislation for Beer Distributors’ Monopolies

After months of acrimonious debate in earlier hearings, a bill to create regional monopolies for beer distributors passed the Senate on Thursday with no discussion whatever, virtually assuring that the measure will reach Gov. George Deukmejian’s desk by the end of the legislative session Sept. 11.

The 21-11 bipartisan vote--the exact majority of the Senate’s membership required for passage--came after Sen. Ralph C. Dills (D-Gardena) assured lawmakers that the bill would provide “consumers with a fair price.” The roll was called several times as advocates sought the deciding 21st vote, which finally was provided by Senate President Pro Tem David A. Roberti (D-Los Angeles), usually regarded as a consumer advocate.

Having passed the Assembly June 24 by a 46-19 vote, the measure need only return to the lower house for concurrence on minor amendments.

Consumer groups, who contend the bill would raise beer prices, said they will take their case to Deukmejian. Two years ago the Republican governor vetoed a similar measure dealing with wine distribution.

“We’re going to start praying outside the governor’s office,” said Walter A. Zelman, executive director of California Common Cause. “There’s a very good chance the governor will be the ultimate protector of consumers on this issue.”

A spokeswoman for Deukmejian said the governor had not taken a position on the bill and will not indicate his intentions until a final version of the measure reaches his desk.

The bill, introduced by Assemblyman Jim Costa (D-Fresno), would divide the state into districts and give individual distributors monopoly control over wholesale beer sales within them.

At present, beer brands that account for about 90% of sales in California are sold by distributors under exclusive contracts with breweries. The other beers are open to competition among distributors.

Costa has argued that giving existing monopoly contracts the force of law and eliminating the remaining 10% of the wholesale business outside those contracts would assure stability for California’s beer distribution industry.

Other States Cited

“Twenty-seven other states have mandatory exclusive territory laws . . . because it is the most cost-efficient method of distributing beer,” Costa said in a statement after the Senate vote.

Beer prices in California are among the lowest in the nation, a fact Costa attributes to the distribution network now in place. Zelman, however, argued that it is the remnant of free-market competition that is restraining prices across the board.

“The small portion of the beer market that is competitive is a driving force for the (part) of the state that is not,” Zelman said. “The beer wholesalers want to eliminate that because it has an impact.”

The bill includes an amendment that would terminate the law in five years if a study by state officials shows that the imposition of exclusive monopoly territories led to higher beer prices. Opponents say the amendment means little because by 1992 monopoly distribution contracts will govern all beer sales in the state.

Times staff writer Carl Ingram contributed to this article.