Category archives for “Tied-House”

Suppliers Now Allowed to Use Social Media to Support Certain Charity Events Sponsored by Retailers

February 17, 2016

Effective January 1, 2016, the California ABC Act contains a new section that loosens the restrictions suppliers face when mentioning a retailer in a social media post. Newly added Business and Professions Code § 23355.3 is aimed at clarifying how suppliers and retailers can co-sponsor nonprofit events. It was drafted, in part, as a response to the backlash that occurred after the ABC filed accusations against several wineries for advertising sponsorship of the “Save Mart Grape Escape” charity fundraising event in 2014. In that instance, several wineries posted or tweeted their support and sponsorship of the event on social media. The ABC reasoned that the suppliers were impermissibly advertising for Save Mart, a retailer, even though the event was held under a nonprofit permit issued to a bona fide nonprofit organization. The ABC alleged that by posting or tweeting about the event, the suppliers were giving a thing of value to the retailer, a practice that has long been considered a violation of California’s tied house restrictions.

California law has long permitted supplier licensees to sponsor nonprofit events if the nonprofit gets an event license, and the new law does not fundamentally change that. However, the new section clarifies that a supplier may advertise sponsorship or participation in such events even if a retailer is also a named sponsor of the event. Payments or other consideration to the retailer are still considered a thing of value, and are not allowed, but social media postings no longer fall under that broad category. There are restrictions on what the supplier is permitted to post about the retailer; posts cannot contain the retail price of alcoholic beverages and cannot promote or advertise for the retail licensee beyond mentioning sponsorship or participation in the event. The supplier can share a retailer’s advertisement for the event on social media, but the supplier is not permitted to pay or reimburse the retailer for any advertisement and cannot demand exclusivity of its products at the event. In short, the new section will allow exactly the type of supplier social media support that occurred in the Save Mart Grape Escape situation.


New California ABC Advisory on Merchandising Services by Suppliers

January 07, 2015

In December 2014, the California ABC posted a new Industry Advisory about merchandising services. Free services provided by suppliers to retail licensees, such as stocking shelves, pricing inventory, rotating stock, etc., are prohibited things-of-value under California Business & Professions Code sections 25500 and 25502. However, a number of permitted exceptions are separately provided for in Section 25503.2. The Advisory was posted in response to inquiries and complaints about the scope of permissible activity. When ABC receives multiple complaints about impermissible conduct, investigations and license accusations may well follow, so it would be prudent for suppliers to review the scope of permissible merchandising activities.

Permitted activity varies depending on the type of retailer and the products involved so we created a simple chart below to help keep it straight.

Note that in all cases, any merchandising activities can only be done with the retailer’s permission. In no case can a supplier move the inventory of another supplier, except for “incidental touching” to access the space allocated to the licensee providing the merchandising service.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2015 · All Rights Reserved ·


TTB Regulators Double Down in Las Vegas

May 12, 2011

Apparently, the TTB doesn’t agree that “anything goes” in Vegas. Just ask Diageo, Pernod Ricard, Moet Hennessey, Bacardi, Future Brands, and E. & J. Gallo Winery. According to the TTB, these companies allegedly violated the FAA’s tied-house “slotting fee” restrictions. A slotting fee has nothing to do with slot machines (good guess), but instead is anything of value a supplier provides to a retailer in exchange for favorable product placement. The TTB’s allegations included “that the companies collectively furnished nearly $2 million in inducements” with the purpose “to obtain preferential product display and shelf space (also known as slotting fees) at Harrah’s Hotels and Casinos.” In an industry guidance circular released shortly before the announcement of the offers in compromise, the TTB reminded industry members that while providing promotional items etc. to retailers might be legal in some contexts, doing so as an inducement for better product placement was a violation of FAA tied-house laws in general and slotting fee prohibitions specifically (at least when the elements of interstate commerce, exclusion of other brands, and, in the case of malt beverages, similar state law are present).

Under the terms of the offers in compromise, none of the companies admitted to any wrongdoing and collectively paid out $1.9 million in fines - the largest set of offers in compromise ever accepted by TTB for trade practice violations. Jackpot.

The TTB’s recent guidance on tied-house rules and slotting fees can be found here: http://www.ttb.gov/trade_practices/ttb-g-2011-3-tied-house-guidance.pdf

The TTB’s announcement and details of the offers in compromise can be found here: http://www.ttb.gov/press/fy11/press-release-fy-11-4-faa-oic.pdf

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·


Supreme Court Denies Certiorari for Wine Country Gift Baskets.com Case

March 07, 2011

As we mentioned last Monday, the Supreme Court was toying with the decision to grant certiorari to Wine Country Gift Baskets.com, et. al., v. John T. Steen Jr., et. al., a case that dealt with Commerce Clause and Twenty-First Amendment issues as they pertain to wine retailers inside and outside the state of Texas. The Supreme Court Justices took the case to conference three times and today finally issued their order denying certiorari. No reasoning for the certiorari denial was given, although such explanations by the Court are often not provided. This means that the Fifth Circuit decision, which upheld Texas’ law prohibiting out-of-state wine retailers from shipping wine directly to Texas consumers while allowing in-state wine retailers to ship wine directly to Texas consumers, will remain the final decision on the case. If you are interested in reading the Fifth Circuit’s opinion for the case, it can be found here.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·


CLOSE

Browse posts by category: