Tie-In Sales - An Unlawful Trade Practice 02/29/2012
The TTB published a new circular this month entitled “Tie-In Sales - An Unlawful Trade Practice.” The new circular, Industry Circular 2012-02, can be found at http://www.ttb.gov/industry_circulars/archives/2012/12-02.html and replaces Industry Circular 2003-3. The TTB’s stated purpose in publishing the circular is to remind alcohol industry members and others that tie-in sales of alcohol beverage "products," as defined in 27 CFR 6.11, and hereafter referred to as "products," are prohibited inducements under the "Tied-House" provisions of the Federal Alcohol Administration Act (FAA Act). What is a Tie-in Sale? A tie-in sale occurs when an industry member requires a retailer to purchase a product that the retailer did not want to purchase, in order to obtain the product the retailer wants. Tie-in sales are a form of unlawful quota sales covered by the FAA Act in 27 U.S.C. 205(b)(7). Tie-in sales are also one of the unlawful means to induce covered under the "Tied-House" regulations promulgated under the FAA Act, which are contained in 27 CFR part 6, "Tied-House." In particular, 27 CFR 6.72 defines a tie-in sale: The act by an industry member of requiring that a retailer purchase one product (as defined in § 6.11) in order to obtain another constitutes a means to induce within the meaning of the Act. This includes the requirement to take a minimum quantity of a product in standard packaging in order to obtain the same product in some type of premium package, i.e., a distinctive decanter, or wooden or tin box. This also includes combination sales if one or more products may be purchased only in combination with other products and not individually. However, an industry member is not precluded from selling two or more kinds or brands of products to a retailer at a special combination price, provided the retailer has the option of purchasing either product at the usual price, and the retailer is not required to purchase any product it does not want. * * * A tie-in sale results in a violation of the FAA Act "Tied-House" provisions (27 U.S.C. 205(b)(7)) and TTB's part 6 regulations (27 CFR 6.21(g)) when the prerequisite elements of means to induce, exclusion, interstate or foreign commerce, and similar State law (in the case of malt beverages) are established. TTB deems tie-in sales to be a serious unlawful trade practice that inherently puts retailer independence at risk in the context of exclusion. 27 CFR 6.152(d). What are some examples of tie-in sales? Tie-in sales occur when:
The above examples are considered tie-in sales because the retailer is compelled or required to purchase one product in order to obtain the product the retailer wants. A tie-in sale occurs regardless of whether the two products are the same brand or different brands of products. A tie-in sale also occurs if another category of alcohol beverage is involved Add Comment Wine, Beer and Spirits Law Practice Group members get involved with industry organizations 02/07/2011
Charles Reidelbach will be speaking at the 5th Annual Best Practices for Owning and Operating a Winery hosted by The Seminar Group in Santa Rosa on March 10, 2011. The seminar covers topics of interest concerning managing your facility and your business. Mr. Reidelbach will also be attending the 18th Annual Symposium on Alcohol Beverage Law & Regulation in Washington D.C. on March 7, 2011, hosted by the National Alcohol Beverage Control Association (NABCA) Our firm has recently participated in the Unified Wine & Grape Symposium, which is the largest wine symposium and trade show in the Western Hemisphere. The firm is also a member of The Wine Institute, the largest advocacy and public policy association for California wine. Allergen Labeling Issues 02/07/2011
First of all, I do not think labeling for a vegan specific diet will ever (should I dare to say ever) be mandatory. It is up to the vegan to seek out producers who cater to their needs, just as it is for other well intentioned individuals to seek out organic and biodynamic producers. Allergens are a different story. Congress has mandated that the TTB work with the FDA to implement FALCPA (Food Allergen Labeling) on alcoholic beverages. In addition to disclosure of the big 8 allergens, there are proposed rules for the labeling of serving facts/information (serving size, calories, etc.). It is definitely worth looking at the proposed rules, and the public comments to them -- posted below. Proposed Rules on Serving Facts: http://edocket.access.gpo.gov/2007/pdf/E7-14774.pdf Public Comments: http://www.regulations.gov/#!docketDetail;D=TTB-2007-0062 Proposed Rule on Major Food Allergen Labeling: http://edocket.access.gpo.gov/2006/pdf/06-6467.pdf Public Comments: http://www.ttb.gov/nprm_comments/ttbnotice62_comments.shtml This clearly is a burden for our industry, and should be weighed against the ultimate benefit to society. Evidence that wine fining agents cause a significant threat to society is lacking. Robert Koch of The Wine Institute provided a well reasoned public comment that discusses this further -- is a good read: http://www.ttb.gov/nprm_comments/ttbnotice62/0620039.pdf It seems to me that "measurable" acceptable amounts of the fining agent in wine should be established before it is required to be labeled as containing it. It should not be the process that is used ("processed using..."), but rather the chemical composition of the consumable. There are acceptable levels of other chemicals that at some higher level are deemed unsafe, such as sulfites, pesticides, and trace metals (lead, copper, etc.). And finally, if all of these processes are required to be on the label, what is the consequence to the winemakers trade secrets??? Over the last few months I have been working diligently on organizing a seminar to take place in San Diego that I am Co-chair of, titled "Owning & Operating an Urban Winery or Brewery". We have put together an incredible lineup of speakers from the alcohol beverage industry. Attorneys from some of the most successful alcohol beverage firms in the nation, as well as representatives from the Wine Institute, California Alcohol Beverage Control, and Constellation Wines U.S. will be speaking. In addition, the CEO’s/Presidents from Crushpad, Ballast Point, and Karl Strauss will also be speaking. Winery owners and operators, brewery owners and operators, farmers and vineyard managers, land use professionals, architects and engineers, attorneys, governmental officials, and anyone involved in or interested in owning a brewery or winery should attend. Attorneys who attend will also get CLE credit. The seminar is set to take place November 10th, 2010 at the Doubetree Hotel in San Diego’s downtown Gaslamp District. Registration and other seminar information can be found here at The Seminar Group website.  Wine producers and wine enthusiasts of Southern California should rejoice now that San Diego County has finally eased restrictions on the establishment of tasting rooms for smaller wineries. Local wineries that bottle less than 12,000 gallons per year will now be able to operate tasting rooms that can also offer retail sales. In the past, efforts to allow for these tasting rooms were stunted by worries about intoxicated wine tasters driving irresponsibly on private roads used to get to these “boutique” wineries. A provision in the ordinance calls for those operating tasting rooms to work out easement issues with the owners of these private roads. The new ordinance displays a conscious attempt on behalf of the San Diego County government to broaden the local wine industry. The movement was spearheaded by the Ramona Valley Vintner’s Association, who have been advocating this change in policy for many years. It is estimated that nearly half a dozen new tasting rooms will open by the end of this year. Image credit to Filomena Scalise / FreeDigitalPhotos.net I was recently published in the July/August 2010 edition of Practical Winery & Vineyard, a prestigious wine industry journal. The article analyzes the recently introduced and highly controversial House Bill 5034, which could effectively shield state legislators from Commerce Clause restrictions when enacting laws regarding alcohol sales and regulation. Here is the link… http://www.practicalwinery.com/julaug10/freerun.htm  Image credit to Publisher/Editor Don Neel at Practical Winery & Vineyard Newly proposed legislation, H.R. 5034, could limit consumers’ choice of wine from other states, and particularly reduce the availability of wines produced by small, less well- known wineries. The proposed Comprehensive Alcohol Regulatory Effectiveness Act (CARE), would have the biggest impact on California producers, and could stagnate innovative and forward-thinking ways of selling wine that lie on the periphery of the “three-tier system” — such as many internet wine sellers ("third party marketers" like Gilte Groupe and RuLaLa) who have benefitted from the Supreme Court's decision in Granholm v. Heald, which assured many wineries and wine-sellers in the U.S. the ability to sell directly to customers in states which have laws allowing in-state direct-to-customer wine sales. California has enacted rules that allow DtC sales of wine without the constraints of the three-tier system. These rules benefit a vast number of small wineries – and their customers – by allowing sales and delivery directly to consumers located in and out of the state.Wineries of all sizes could be pushed into a corner by states passing laws aimed at promoting their own wine industry to the detriment of those in other states. There is strong opposition to the bill. A recently created Facebook group of nearly 12,000 people and counting is opposing this legislation, in addition to other websites such as FreeTheGrapes.org, which asserts the bill is “an unprecedented special interest power grab that is a direct threat to legal, regulated winery-to-consumer shipping now working successfully in 37 states.” In Granholm, "the decision was simple: states can regulate, but not discriminate. In truth, Granholm and the decisions that came before it give great deference to the 21st Amendment [repeal of Prohibition] and state regulation of alcohol, but it affirms that these rights do not supersede other provisions of the Constitution, such as the Commerce Clause” says California Representative Mike Thompson, owner of a small vineyard in Lake County, CA. While the likelihood of the passage of this bill remains uncertain, many fear the bill – if enacted – would protect otherwise unconstitutional state laws, damage the ability of small wineries to sell their wine, prevent creative online wine endeavors, and preserve the position of wholesalers in the alcohol sales chain. Currently the bill has been referred to the House Judiciary Committee, which will hopefully shed more light on the intricacies and impact of this bill. Welcome 05/11/2010
Welcome to my wine blog. The purpose of this blog is to provide general news and information surrounding legal issues effecting people and businesses in the wine industry. I hope that you will share your thoughts by responding to the topics presented, and providing ideas for new topics of interest. Please be advised that nothing presented on this website shall be considered legal advice, so please consult your attorney if you would like such advice. | ArchivesFebruary 2011 AuthorMy name is Charles Reidelbach and I am an attorney who Categories |
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