Thursday, February 9, 2012

Payola

I got put onto this story from the US yesterday. Basically it touches on what seems to be a recurring scandal in the brewing industry there - that brewers or distributors will make illegal payments to get bars to put their beers on.

If one assumes that their anti-inducement rules generally work, in spite of all the issues people like Flying Dog have, then they must play a part in the explosive growth of independent brewing there.

As much as we like how well the New Zealand brewing industry is doing, it has never had the gold-rush feel of the US industry. Surely it's the hospitality industry (i.e. bars) who are the obstacle. Because what's illegal in the US is a cornerstone of the hospitality industry here.

Every now and then there's an appeal for some kind of tax-break or special treatment for craft brewers. (Because, you know... defining who is a craft brewer is dead easy and a large industrial brewer would never have their lawyers find a way for the tax-break to apply to them.)

But surely the single best way to get beer that we like (trying to avoid saying "craft") into New Zealand bars is to outlaw the ways that DB and Lion tie the bars down? We have government and private institutions dedicated to making sure New Zealand's economy is competitive but they won't even look at a practice that is all about using inducements to eliminate competition. And if competition law doesn't get them, surely contractual penalties for not selling a minimum volume of beer breach the Sale of Liquor act.

Seriously - why do Lion and DB get away with what they do without a whisper?

3 comments:

  1. Because... of the same reason we can't define craft. Why is a voluntary contract between a brewery and a bar bad? At what point do you say "no, you're too big to ask a bar to sign that contract"? It's just messy. Best to do exactly what you are doing Dom. Stick to the "no crap on tap", when it's your bar, and you get to define what "crap" is. Grow the demand. Educate the punters. Soon it'll be suicide for a bar to lock themselves into Lion/DB/Independent, so... they won't.

    Yes, that's all wishful thinking, but I'd rather keep trying to make that happen than live in a world we we ask the government to solve our problems for us.

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  2. Greig, you're so right in a fundamentalist libertarian sort of way. I even kind of agree. But we live within an economic system that in theory at least recognises the need for checks on unbridled use of market power and wealth, which is why we have the Commerce Act. Forging on without resorting to competition law is an option, but it staggers me that we (New Zealand, not you and I) fuss and fret over fostering competition while ignoring a standard business practice explicitly designed to "substantially lessen competition" (the words of the act).

    And to answer a point in your question, I do see a difference between the "what is craft" question and the "who can have a solus agreement" question. Craft is undefinable, and I really wish people would stop trying. But insisting that a supplier may compete on price and quality alone, not on bribes for exclusivity, is pretty concrete. (Policing is another matter, hence the American problem.)

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