Miami's Eagle Brands Settles for $1.5 Million Over Alleged Pay-to-Play Violations

Eagle Brands, a Miami-based distributor of Budweiser beer, has agreed to pay a $1.5 million settlement to the federal government for allegedly violating laws that govern how companies compete with one another in selling alcoholic beverage products, the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) announced on December 6.

The TTB alleges that the violations happened between May 1, 2015, and April 30, 2018, at the Eagle Brands headquarters and throughout Miami-Dade County. The complaint claims the company paid retailers to "carry and promote its products to the exclusion of competing products." The payments were disguised as banquet events, credit card payments for rebates, or consumer samplings, the TTB says. Additionally, the TTB also alleges that Eagle Brands provided draft systems that were to be used for their own products.

The allegations were a result of a joint operation between TTB agents and special agents from the Miami office of the Florida Division of Alcoholic Beverages and Tobacco (ABT), the same operation that ensnared Ohio's Warsteiner Importers Agency and resulted in a $900,000 settlement from the company last May.

Eagle Brands' settlement is the largest the TTB has ever accepted, according to the agency. In addition to Budweiser beer, Eagle Brands also carries beer products for some local breweries and distributes throughout Miami-Dade and Monroe Counties.

A settlement like this is referred to as an "offer in compromise" and doesn't necessarily imply wrongdoing. New Times reached out to Eagle Brands, which said the company fully cooperated with the government's investigation. In an email, Eagle Brands managing partner George Halper said the alleged infractions were committed by a small number of employees.

"At no time did Eagle Brands as a company admit to any wrongdoing and the company was not found guilty of any wrongdoing," Halper wrote. "Eagle Brands and the TTB are committed to working cooperatively towards greater education and compliance efforts in the Miami marketplace."

The alleged actions violate the Federal Alcohol Administration, a government agency created after Prohibition, which ended when Congress passed the 21st Amendment. Its creation established a three-tier system of manufacturer, wholesaler, and retailer of alcoholic beverages

The TTB released an incomplete list of trade practice laws and regulations in an industry circular published on November 8.

TTB operations like the one carried out in Miami have become more frequent since Congress appropriated $5 million in 2017 for enforcement efforts. However, such operations will soon draw down when the agency reduces its trade practice enforcement program to 2016 funding levels, according to a TTB budget report.

"At the FY 2019 funding level," the report stated, "TTB will need to bring closure to its active trade practice investigations and reevaluate the program."