IBJNews

Alcohol distributor fights decision allowing big competitor into Indiana

Back to TopCommentsE-mailPrintBookmark and Share

National Wine & Spirits Inc. suffered a staggering reversal of fortune when a state regulatory body dropped its opposition to a giant competitor entering the Indiana market.

And now the Indianapolis-based wine and liquor distributor is going to court to stop it.

The Indiana Alcohol and Tobacco Commission ruled Nov. 5 that Miami-based Southern Wine & Spirits of America Inc. could distribute in Indiana. The wine and liquor permits were issued as of Nov. 20.

That’s bad news for National. Even though it controls nearly 60 percent of the Indiana market, it is 1/10 the size of Southern. Southern holds distribution agreements with alcohol manufacturers in 29 states, which National fears it will leverage to steal away National’s Indiana contracts.

National CEO James E. LaCrosse called Southern “the 800-pound gorilla” earlier this year, warning the commission that Southern would drive his company out of business in Indiana, where it employs about one-third of its 1,700 workers.

The four-member commission’s decision to OK Southern’s entry was “arbitrary, capricious and otherwise not in accord with law,” National’s attorneys wrote in their lawsuit filed Nov. 16. They want Marion Superior Court Judge David Dreyer to stay the permits and tell the commission to reconsider its ruling.

Calls to National’s officers and attorneys were not returned.

The commission’s decision was surprising. Its unanimous ruling in favor of Southern reversed two previous rulings—also made unanimously—that denied Southern’s application for permits.

In 2008, the commission turned Southern away because the owners of the company dwell outside Indiana. That residency restriction, however, was effectively nixed in a Sept. 14 opinion by the Indiana Attorney General’s Office.

The next day, the commission denied Southern again, this time citing anticompetitive behavior in other states. Southern’s attorneys said the commission’s reasons were “economic protectionism.”

Alex Tanford, an Indiana University law professor in Bloomington, said National’s chances in court are low because Southern’s anticompetitive behavior in other states “is not grounds for denying them a permit.”

Tanford, who has lobbied in recent years to allow Hoosiers to buy wine online, said he likes the commission’s decision.

“Will it hurt National?  Who knows, and who cares?” he wrote in an e-mail. “Competition is good for any industry. It may force National to do a better job of serving the public with a wider variety of products (especially wine) distributed at a lower cost.”

Thomas Snow, chairman of the commission, declined to comment on the body’s approval of Southern’s permits or on National’s lawsuit, which names the commission as defendant.

Rick Northern, an attorney for Southern, also declined to comment on the lawsuit but said the company is moving to begin operations in Indiana.

“We’re excited about coming to Indiana, and we’re pleased with the commission’s decision,” he said.

However, National contends that Southern has already been angling to monopolize the Indiana market via a joint venture it announced in August 2008 with Dallas-based Glazer’s Distributors. Glazer’s has an ownership stake in Indiana’s second-largest liquor distributor, Olinger Distributing Co.

In court filings, National claimed Southern and Glazer worked together to lure away an alcohol manufacturer, Las Vegas-based Patron Spirits Co., which had used National as its Indiana distributor for 12 years.

National officers told the commission that, in January, a Patron representative said the company had switched its Indiana business to Southern. He later corrected himself to say Olinger.

“There is a direct link joining the highest levels of Olinger’s management, the joint venture and Southern,” wrote National’s attorneys in their lawsuit.

That relationship worried the commission, according to its Sept 15 denial. The commission also was concerned that Southern had been investigated for trade-practice violations in Illinois in 2002 and in New York in 2005.

But six days after the commission’s denial, Southern and Glazer announced that the joint venture was off because of “the sheer complexity of the transaction.”

Southern, citing the end of the joint venture, pressed the commission anew for Indiana permits. It also countered the concerns about its trade practices by noting that the Illinois and New York investigations looked at all major alcohol distributors in those states, including National in the Illinois case.

“Unless the commission intends to revoke the permits of every Indiana wholesaler and supplier that has been investigated in another state, the commission’s [denial] sets forth an unequal and, therefore, arbitrary application of law,” Southern’s attorneys wrote in a brief filed with the commission.

The commission agreed. The end of the Southern-Glazer joint venture removed the key hurdle, Snow wrote in his ruling, adding that Southern’s arguments had “refuted” all concerns about its trade practices.

But National’s attorneys derided Southern’s “everybody’s-doing-it” argument, saying it ignored that investigations had turned up evidence of trade violations against Southern, but not against National.•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Of what value is selling alcoholic beverages to State Fair patrons when there are many families with children attending. Is this the message we want to give children attending and participating in the Fair, another venue with alooholic consumption onsite. Is this to promote beer and wine production in the state which are great for the breweries and wineries, but where does this end up 10-15 years from now, lots more drinkers for the alcoholic contents. If these drinks are so important, why not remove the alcohol content and the flavor and drink itself similar to soft drinks would be the novelty, not the alcoholic content and its affects on the drinker. There is no social or material benefit from drinking alcoholic beverages, mostly people want to get slightly or highly drunk.

  2. I did;nt know anyone in Indiana could count- WHY did they NOT SAY just HOW this would be enforced? Because it WON;T! NOW- with that said- BIG BROTHER is ALIVE in this Article-why take any comment if it won't appease YOU PEOPLE- that's NOT American- with EVERYTHING you indicated is NOT said-I can see WHY it say's o Comments- YOU are COMMIES- BIG BROTHER and most likely- voted for Obama!

  3. In Europe there are schools for hairdressing but you don't get a license afterwards but you are required to assist in turkey and Italy its 7 years in japan it's 10 years England 2 so these people who assist know how to do hair their not just anybody and if your an owner and you hire someone with no experience then ur an idiot I've known stylist from different countries with no license but they are professional clean and safe they have no license but they have experience a license doesn't mean anything look at all the bad hairdressers in the world that have fried peoples hair okay but they have a license doesn't make them a professional at their job I think they should get rid of it because stateboard robs stylist and owners and they fine you for the dumbest f***ing things oh ur license isn't displayed 100$ oh ur wearing open toe shoes fine, oh there's ONE HAIR IN UR BRUSH that's a fine it's like really? So I think they need to go or ease up on their regulations because their too strict

  4. Exciting times in Carmel.

  5. Twenty years ago when we moved to Indy I was a stay at home mom and knew not very many people.WIBC was my family and friends for the most part. It was informative, civil, and humerous with Dave the KING. Terri, Jeff, Stever, Big Joe, Matt, Pat and Crumie. I loved them all, and they seemed to love each other. I didn't mind Greg Garrison, but I was not a Rush fan. NOW I can't stand Chicks and all their giggly opinions. Tony Katz is to abrasive that early in the morning(or really any time). I will tune in on Saturday morning for the usual fun and priceless information from Pat and Crumie, mornings it will be 90.1

ADVERTISEMENT