Exclusive: Treasury wants to boost the US alcohol market to help small players

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  • Two largest brewers control 65% of the market
  • Outdated laws date back to the end of Prohibition in 1933
  • The Treasury will streamline tax reporting
  • States urged to consider anti-competitive effects of laws

WASHINGTON, Feb 9 (Reuters) – The U.S. Treasury Department on Wednesday raised concerns about the consolidation of the $250 billion U.S. alcohol market and outlined reforms it said , could spur competition and save consumers hundreds of millions of dollars every year.

New M&A scrutiny, different tax rates and the lifting of regulatory burdens for new entrants to the wine, beer and spirits market would make the market fairer for new brewers and cheaper for new brewers. consumers, according to a 63-page Treasury report.

The long-awaited report, due out later Wednesday, is part of a July executive order on competitiveness and the Biden administration’s latest push to combat what it calls excessive consolidation in industries, from packing meat to shipping.

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The Treasury received more than 800 public comments on the issue, then suggested tougher Justice Department and Federal Trade Commission oversight and new rules in the report, which was seen by Reuters.

The US beer, wine and spirits market has spawned thousands of new breweries, wineries and distilleries over the past decade.

But a web of convoluted state and federal regulations, some of which date back to the end of Prohibition in 1933, coupled with “exclusionary behavior” on the part of massive producers, distributors and retailers, means small entrants can have trouble struggling to compete and thrive, U.S. officials said.

The two largest brewers selling beer in the US – Anheuser Busch InBev (ABI.BR) and Molson Coors (TAP.N) – account for 65% of US beer revenue.

“We are determined to protect what has been a thriving and vibrant industry with the entry of many small businesses,” while tackling issues that “lead to excessive prices for consumers,” a senior U.S. official said. .

So-called “post and hold” laws, which restrict price competition, mean beer consumers alone pay $487 million a year more than they should, and can drive up the cost of a bottle of wine by up to 18% and bottle of spirits by more than 30% according to the report, citing studies.

The DOJ and FTC, which share antitrust enforcement work, should take a closer look at proposed acquisitions of smaller players by larger ones, given that past claims that such deals would lower prices won’t hold up. are not materialized, the Treasury said.

The report also called on the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB) to change labeling rules to protect public health and limit the impact of lobbying. In 2017, liquor companies reported 303 lobbyists in Washington.

U.S. states — which control most oversight — should examine the anti-competitive impact of regulations and franchise rules on small producers, the Treasury said.

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Reporting by Andrea Shalal and Diane Bartz; Editing by Heather Timmons and Aurora Ellis

Our standards: The Thomson Reuters Trust Principles.

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