UPDATE 1-Treasury wants to boost 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* Outdated laws date back to the end of Prohibition in 1933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 review anti-competitive impacts of laws (updated with Treasury statement)

By Andrea Shalal and Diane Bartz

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 each year.

A new review of mergers and acquisitions, 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 ones. consumers, the Treasury said in a 63-page article https://home.treasury.gov/system/files/136/Competition-Report.pdf.

The long-awaited report is part of a July 09 executive order on competitiveness. Its focus on the beer industry, in particular, marks the latest push by the Biden administration to fight what it calls a consolidation excessive in the meat packing industries https://www.Reuters.com/business/retail-consumer/high-us-meat-price-packer-profiteering-or-capacity-crunch-2022-01-19 at shipping.

The Treasury, responding to more than 800 public comments on the issue, suggested tighter oversight by the Justice Department and the Federal Trade Commission, tougher enforcement of existing rules, and the development of new rules in the report, which was first reported by Reuters.

“American consumers, small business owners, entrepreneurs and workers should not have to suffer under the thumb of a highly concentrated beer industry,” Assistant Attorney General Jonathan Kanter said. “Enforcers and regulators must have the courage to learn and the courage to uphold the law and protect competition.”

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 and Molson Coors – 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 more a year than they should, and can drive up the cost of a bottle of wine up to 18% and a bottle of spirits over 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, the Treasury said, noting that price advantages promised in past deals do not had not materialized.

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. (Reporting by Andrea Shalal and Diane Bartz; Editing by Heather Timmons, Aurora Ellis, Alexandra Hudson)

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