Last week, the Massachusetts Supreme Judicial Court upheld a $2.6 million fine against beer wholesaler Craft Brewers Guild (a Sheehan family-owned company) for violating anti-price discrimination statutes and commercial bribery regulations. In the same decision, the Court overturned a fine lodged against a bar that received such kickback payments, holding that Massachusetts retailers do not violate commercial bribery regulations by accepting kickback payments.
Beginning in 2013, Craft Beer Guild, LLC d/b/a Craft Brewers Guild (CBG), a licensed wholesaler, implemented a “pay-to-play” scheme involving alcohol beverage suppliers, retailers, and various management and marketing companies associated with licensed retailers. CBG paid “rebates” to these third-party companies in exchange for their associated retailers agreeing to sell CBG products at their bars and restaurants. To hide these unlawful payments to retailers, the third-party companies billed CBG for various unperformed services such as “marketing support” and “promotional services.”
CBG did not offer these rebates to all retailers, and rebate amounts differed among the retailers involved. Rebel Restaurants, Inc. d/b/a Jerry Remy’s (Rebel), a licensed retailer, received a $20 rebate for each keg sold in exchange for carrying CBG-distributed brands. Rebel received the payments through its associated third-party company, Rebel Marketing. Rebel Marketing was not a licensed retailer.