Warren Buffett drinks group in Texas lawsuit

A drinks distribution company owned by Warren Buffett’s conglomerate Berkshire Hathaway has launched legal action against the Texas Alcoholic Beverage Commission (TABC).

Warren Buffet is chairman, president and CEO of Berkshire Hathaway, parent company of McLane

McLane Company, a US$28 billion supply chain services business owned by Buffett’s Berkshire Hathaway, joined the Texas Association of Business in filing a federal lawsuit against TABC in Austin, Texas.

The suit urges that laws around the three-tier alcohol distribution system in Texas be applied in a “fair, consistent and legal manner”, accusing TABC of “arbitrary licensing practices”.

The three-tier system in the US dictates that alcoholic drinks manufacturers, distributors and retailers must operate independently.

“The TABC has taken this common prohibition to an absurd extreme by asserting that even one overlapping share of stock ownership across tiers, whether direct or indirect, violates its interpretation of the law, the so-called One Share Rule,” the Texas Association of Business states.

McLane has been unable to attain a distribution license in Texas since its parent company owns a 2% stake in retail giant Walmart.

However, McLane and the Texas Association of Business said this “defies common sense” since “the majority” of manufacturers, retailers and distributors have some over-lapping ownership with businesses in other tiers.

“The Texas Association of Business opposes regulatory actions – like the TABC’s so-called One Share Rule – that harm the Texas economy and job creation, for no good reason,” said Bill Hammond, CEO of the Texas Association of Business.

“We’re taking this action to demand that our government create a level playing field for all business in the State of Texas – anything less goes against the very fabric of our state.

“Texas has succeeded principally because we make it easier, not harder, to do business here. Regrettably, the TABC’s policies do not reflect the vision and philosophy of the state, and through its absurd interpretation of the Alcoholic Beverage Code, it is discouraging business expansion.”