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Your Opinion: Oppose altering liquor franchises

Your Opinion: Oppose altering liquor franchises

May 5th, 2013 by Ed Rhode, Missourians for Fair Competition in News

Dear Editor:

Missouri legislators should oppose Senate Bill 365 and House Bill 759. While these bills purport to "fix" Missouri's franchise laws with regard to liquor distribution, they actually are nothing more than special interest legislation designed to enhance the profits of one Missouri liquor distributor at the expense of an array of other Missouri businesses and consumers. The only thing these bills "fix" is deep profits for one company, by giving it a nearly unbreakable franchise relationship with each of its suppliers and eliminating any competition.

Missouri liquor manufacturers and suppliers come in all shapes and sizes. They include some of the oldest wineries and distilleries in the country. They all contribute significantly to the Missouri economy by creating revenue and jobs.

These businesses rely on distributors to reach their end consumers. Currently, manufacturers and suppliers enter into agreements with their distributors, and if the distributors do not perform well, the suppliers can take their business elsewhere. More distributors have been entering the market recently, fostering competition. This is as it should be in a free market system.

Fearing competition, the largest Missouri liquor distributor has gotten behind SB365 and HB759. By defining every agreement to do business as an essentially unbreakable franchise, these bills would place the suppliers at the mercy of their wholesalers. And, because the supplier cannot terminate the business relationship, there is no opportunity for competing distributors.

As a practical matter, the bills would harm retailers and consumers by driving up prices. Without the potential for competition, there is no incentive for a distributor to work efficiently or economically.

The existing Missouri laws and principles of contracting apply equally to all industries. There is no reason the Legislature should get involved to show favoritism to one leading wholesaler in the liquor industry. The current statute treats all wholesalers equally and fairly.

Besides removing an even playing field from the liquor industry, this legislation also sends a poor message to other industries doing business or looking to expand in Missouri. Once the Legislature starts playing favorites, where will it stop.

By picking winners and losers in these bills, the Legislature sends a clear message: the free market has no place in our state.

If Missouri wants to be welcoming to business, it must allow market competition, rather than passing laws granting a monopoly to the business that can lobby the loudest.