March 11, 2010 / 5:17 PM / 7 years ago

Anheuser-Busch sues Illinois over blocked beer bid

* Anheuser: regulator's ruling curbs interstate commerce

* Illinois commission declines to comment

By Martinne Geller and Jonathan Stempel

NEW YORK, March 11 (Reuters) - Brewer Anheuser-Busch InBev NV (ABI.BR) has sued an Illinois state regulator for blocking its attempt to buy an alcoholic beverage distributor, in violation of the U.S. Constitution.

The lawsuit by the world's largest brewer followed Wednesday's ruling by the Illinois Liquor Control Commission that Anheuser was a "nonresident dealer," making it ineligible under state law to also operate as a distributor.

Anheuser had sought through its Wholesaler Equity Development Corp affiliate to buy the 70 percent of City Beverage it did not already own, for what it called a "substantial amount of money."

The seller is Soave Enterprises, a privately held, Detroit-based company with holdings in dozens of companies.

Anheuser has owned 30 percent of City Beverage since 2005. Anheuser brands include Budweiser, Bud Light, Stella Artois and Beck's, among others.

A spokeswoman for the commission declined to comment on the lawsuit, which was filed in Chicago federal court against the Illinois commission and Acting Chairman Stephen Schnorf.

Illinois has a "three tier" system for selling alcoholic beverages that requires producers to sell beverages to wholesalers or distributors, which then sell them to bars, restaurants and stores.

The commission had in its Wednesday ruling defended the system, which it said achieves the public policy objectives of avoiding potential vertical monopolies and limiting the risk that cheap alcohol could flood the market.

Yet Anheuser complained that the ruling constitutes mere "thinly-veiled economic protectionism" in favor of in-state brewers, and violates the Commerce Clause because it inhibits interstate commerce.

"The effect of this explicit discrimination is to confer substantial economic benefits on in-state beer producers at plaintiffs' expense," Anheuser said. It called the commission's review and decision-making "highly suspect and arbitrary."

Anheuser's lawsuit seeks to block the Illinois commission from improperly interfering with the City Beverage acquisition and denying appropriate distributor licenses.

The case is Anheuser-Busch Inc et al. v. Schnorf et al, U.S. District Court, Northern District of Illinois, No. 10-01601. (Reporting by Martinne Geller and Jonathan Stempel; Editing by Tim Dobbyn)

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