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The Texas legislature is currently considering a bill (SB639) that would place new anti-competitive regulations on the state's beer industry. The legislation attempts to stop 'reach-back pricing' by requiring all beer manufacturers to sell their product to distributors across the state at one set price – this strips the industry of free-market principles and prohibits them from setting their own price point. This legislation relies upon a government imposed, one-size-fits–all price fix that will undoubtedly lead to higher costs for consumers across the board. This legislation could potentially limit competition for smaller micro breweries as well who either can’t afford, or will be unable to meet the arbitrary and illogical requirements. For example, beer manufacturers will be unable to consider geographic location or shipping costs when setting their prices. A small craft brewery in East Texas may be forced to take a loss on beer sold in West Texas if the state regulated price was lower than their operational cost once the product was packaged and shipped.
SB639 hinders competition in the states beer industry in several other ways as well. One portion of the bill would prohibit beer manufacturers from selling their distribution rights to wholesalers. This is an unfair and burdensome regulation for smaller craft breweries that contribute nearly half a billion dollars per year to the Texas economy. Beyond the economic impact, it is absolutely absurd that the State of Texas has the audacity to attempt to engineer the marketplace. Texas politicians have been some of the most outspoken against the progressive economic and crushing regulatory agenda of the Obama Administration, yet they are starting down the same path in their own backyard.
Texas should be encouraging competition in its thriving beer industry, not handing down more regulations that hinder growth, hurt consumers, and weaken free market principles.