Website l Biography l Press Releases l Legislation
| Protecting Healthy
Competition in the Liquor Industry Legislative Column for May 14, 2013 |
|---|
A bill that will receive some degree of attention during the session’s final hours is Senate Bill 114, which passed out of the Senate in March, but will return to the upper chamber for a second look after receiving significant changes in the House of Representatives. When originally passed out of the Senate, the bill simply addressed issues pertaining to homebrewed beer, but amendments added by the House have turned the measure into something that is anti-business and picks winners and losers in the marketplace. Many recognize this bill as the measure addressing the "liquor war" in Missouri. I strongly support local businesses' efforts to fairly compete in the job market, keeping prices low for consumers while growing their business at the same time. Missouri follows a three-tier distribution system that has been followed since the repeal of prohibition, which addresses the relationship between parties in the liquor industry. It requires alcohol producers and suppliers to sell their products to distributors, who then sell the beverages to retailers. In 2011, a federal court ruling nullified a state law addressing the "franchise" system that had controlled the business relationship between suppliers and distributors since 1975. After the 2011 ruling, some of the nation's largest liquor suppliers began filing lawsuits to dissolve their contracts with distributors. While distributors are not unified on Senate Bill 114, some support the binding franchise system. Several companies want the Legislature to statutorily bind their customers to their business, prohibiting them from fairly competing in the marketplace with other companies. Under the current form of SB 114, customers of liquor wholesalers would be bound to the wholesaler they use as of August 28, when the bill would take effect, if passed by the Legislature and signed by the governor. The bottom line is a Missouri business could be contractually stuck in a business relationship with a wholesaler that no longer performs or meets its needs. Although some say the "small guys" — small breweries and wineries — are protected in the legislation, those small businesses would have to pay a costly penalty if they discontinue business with the wholesaler. This, too, is unfair. I strongly feel this proposal is unconstitutional — Missourians deserve the right to conduct business with whomever they choose and should not be obligated to follow government rule as to where they are stuck conducting business. Senate Bill 114 would no longer allow two consenting parties to contract a franchise agreement that is best for their particular business relationship. It's important to note that Missouri already has residency laws in place, meaning every liquor wholesaler must be a Missouri-based corporation. Wholesalers in Missouri could only lose business to other Missouri corporations — if they want to keep their customers, they should compete for business, the same as every other company. I do not believe the Legislature's job is to step in and retain a company's customers, particularly to do so through contract law. I will do everything in my power to support consumer protections, competitive business, and Missouri jobs for our state. Citizens deserve the opportunity to let their businesses thrive in the free market. Our country is one in which people can generally conduct their business to their wishes, not one that promotes winners and losers and that bullies businesses into working with or contracting with specific entities. Please stay tuned to the discussion in the Missouri Senate as legislative work continues. If I can be of any assistance or can answer any of your questions regarding this matter, please feel free to contact my Capitol office at (573) 751-2183. |
| Senator Rob Schaaf State Capitol Building, Room 319 Jefferson City, MO 65101 Phone: (573) 751-2183 |