Written by A TTB Trade Practice Investigation has resulted in an $850,000 Offer in Compromise for Illinois-based wholesalers, RN Acquisition, LLC and City Beverage – Markham, LLC of Chicago and Arlington Heights, Illinois.
The U.S. alcoholic beverage industry has seen an increase in enforcement measures by the TTB following the TTB’s enforcement budget increase of the past several years. The rules governing the relationship between suppliers and retailers, and wholesaler/distributors and retailers, can be tricky, especially in the realm of brand sponsorships for live events, stadiums, arenas, airports, etc. We stay up to speed with the rules, regulations and policies governing such relationships, which, if not properly understood, can result in significant liability for industry members. In addition to knowing and understanding the federal rules, regulations and policies governing alcoholic beverage industry member practices, it is crucial to understand the laws of the individual state(s) an industry member is doing business in, as a state’s laws can further restrict industry member activity.
In the case of the OIC mentioned above, the TTB alleged that these entities and/or their affiliates unlawfully:
- Violated the Federal Alcohol Administration (FAA) Act’s tied house prohibition (27 U.S.C. § 205(b)), by inducing a retailer to purchase their malt beverages to the exclusion of competitor brands by paying sponsorship funds to a third-party concert promotion company commonly owned and/or managed by the retailer’s owner and/or manager;
- Violated the FAA Act’s tied house and exclusive outlet (27 U.S.C. § 205(a)) prohibitions by paying or reimbursing another industry member as part of a scheme to induce a multi-purpose venue retail concessionaire to purchase their malt beverages to the exclusion of competitor brands through a sponsorship of the venue, and by providing various trade items to the retail concessionaire;
- Violated the FAA Act’s tied house prohibition by providing various trade items to a retailer at below-market value, which induced the retailer to purchase the their malt beverages to the exclusion of competitor brands; and
- Violated 27 U.S.C. § 203(c), by operating without a basic permit at one of its warehouses.
Last modified: June 25, 2021
