The battle over ever-rising liquor prices spilled into Cook County Circuit Court on Thursday as attorneys for the giant liquor distributor owned by Blackhawks president William Wirtz filed suit against the world’s largest spirits manufacturer in an effort to block a new round of price increases.
Attorneys for Judge & Dolph, the Wirtz distribution company, sued UDV North America, seeking to prevent UDV from raising its prices to Judge & Dolph and other distributors on Jan. 23.
“UDVNA has resorted to a campaign for coercion and intimidation unreasonably designed to deprive (Judge & Dolph) of free choice in setting its price to retailers,” the lawsuit, filed in Cook County Circuit Court, alleges.
Officials with the distiller could not be reached for comment.
Michael Conway, an attorney for Judge & Dolph, said “the thrust of this lawsuit is to attempt to protect the consumers from having UDV just continue to raise its prices.”
UDV has blamed the price increases on Judge & Dolph, which bumped up prices it charged retailers an average 3 to 6 percent this summer after the legislature raised liquor taxes and granted special business protections to distributors.
Judge & Dolph has announced another round of price increases to retailers effective Saturday, and those hikes will probably be passed to consumers who are already paying $1 to $2 more for a bottle of hard liquor than six months ago. Last month, a UDV official predicted that prices would go up an additional 50 cents on average if Judge & Dolph’s new year’s hike went forward.
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The lawsuit represents the latest round in months of bickering between the Wirtz company and UDV, a unit of the London-based conglomerate Diageo, PLC, which also owns the Burger King chain and Pillsbury foods. For the year ended June 30, Diageo reported pretax profits of $2.86 billion.
UDV maintained that its wholesale price hikes shouldn’t be passed along by distributors to retailers because distributors had already raised prices “far beyond” what was needed to cover the liquor tax increase, estimated to raise $80 million a year in additional revenue for the state.
But, in a letter last fall to the retailers it supplies, Judge & Dolph, UDV’s main distributor in Illinois, accused UDV of greed for trying to force prices even higher. “This is a vindictive, calculated and selfish decision by UDV to undermine the health and stability of our industry while lining their own pockets,” said the letter.
Responding to that accusation, Mark Waller, president of UDV’s central region, said “Judge & Dolph is demonstrating its disregard for consumers and retailers and its belief that monopoly protection makes it immune to the movements of the marketplace.”
The bickering between business partners flared into the open after a bitter battle in Springfield earlier this year in which the Wirtz firm and other distributors persuaded lawmakers to make it nearly impossible for suppliers like UDV to switch distributors.
Defenders of what was called the Illinois Wine and Spirits Industry Fair Dealing Act, signed into law by Gov. George Ryan in May, said it was needed to protect distributors and their employees from heavy-handed business tactics by distillers. Critics, on the other hand, dubbed it the “franchise forever” law and claimed it smacked of protectionism.
UDV officials have said the law makes it difficult for their firm to end relationships with inefficient distributors and “removes any incentive for distributors to provide better prices or services.”
According to the lawsuit filed Thursday, UDV has attempted to “tarnish” Judge & Dolph’s reputation with its customers, claiming “falsely” that the distributor did not need to pass along UDV’s price hikes to retailers.
Most importantly, argue attorneys for the Wirtz firm, UDV has threatened to meet any price increase by Judge & Dolph “with a corresponding retaliatory price increase in the future.”
The suit alleges that the threats have “the intended illegal effect” of stopping a Judge & Dolph price increase to retailers scheduled for Jan. 1.
The Wirtz Corp. is one of the larger distributors of alcoholic beverages in the United States. It controls distributors in six states, including Illinois, Wisconsin, Texas, Nevada, Minnesota and Iowa. Because the company is privately held, its profit figures are not available. But, according to the lawsuit filed Thursday, Judge & Dolph’s sales in Illinois exceed $300 million.