Current through Register Vol. 48, No. 52, December 27, 2024
a) Except as allowed by the Act, it shall be
unlawful for any licensed manufacturer, non-resident dealer, distributor,
importing distributor, foreign importer, any of their officers, managers,
partners, owners, employees, agents, or affiliates, or any member of the family
of such manufacturer, non-resident dealer, distributor, importing distributor,
or foreign importer (collectively referred to as an "industry member") to
furnish, give or lend money or anything of value, or otherwise loan extend
credit (other than merchandising credit in the ordinary course of business for
a period not to exceed 30 days, as permitted by Section 6-5 of the Act, and
Section
100.90
of this Part), directly or indirectly to a licensed retailer or any officer,
associate, member, representative, agent or employee of that licensee
("retailer"). It is likewise unlawful for any retailer, as defined in this
subsection, to accept or receive money or any item of value from an industry
member. A retailer does not include a special event retailer as defined in
Section 1-3.17.1 of the Act.
b)
Third-Party Arrangements. The furnishing, giving, renting, lending or selling
of equipment, fixtures, signs, supplies, money, services or other thing of
value, not specifically allowed by this Section, by an industry member to a
third party, when the benefits resulting from the things of value flow to a
retailer, is an indirect furnishing of a thing of value within the meaning of
Sections 6-5 and 6-6 of the Act. Indirect furnishing of a thing of value
includes, but is not limited to, making payments for advertising to a retailer
association or a display company when the resulting benefits flow to an
individual retailer. An indirect furnishing of a thing of value does not arise
when the industry member did not intend that the thing of value would be
furnished to a retailer by a third party, or the industry member did not
reasonably foresee that the thing of value would have been furnished to the
retailer.
c) Violations of the "Of
Value" Provisions of Sections 6-5 and 6-6. Performance of the following
activities or provision of the following items violates the provisions on
giving anything "of value" under Sections 6-5 and 6-6 of the Act:
1) Shelf Space Payments, Display Service and
Slotting Fees Prohibition. An industry member shall not directly or indirectly
offer or give anything "of value" to a retailer, and a retailer shall not
directly or indirectly request or accept anything "of value" from an industry
member, in exchange for offering for sale or displaying an industry member's
product on a retailer's shelf, on a tap handle, at any other desired location
within the retail establishment, or on a retailer's website.
2) Credit to Retailers. An industry member
shall not provide credit to retailers unless permitted by Section 6-5 of the
Act as implemented by Section
100.90
of this Part. The statute provides the following parameters for extending
credit to retailers:
A) No credit extensions
are allowed on the purchase of beer by retailers. The full invoice cost of beer
must be paid in cash as defined in Section
100.90(j)
by the retailer on or before the delivery date.
B) An industry member selling wine or spirits
to a retailer may extend a merchandising credit in the ordinary course of
business not to exceed 30 days.
3) Security Interest. An industry member's
acquisition of a mortgage on any of the real or personal property a retailer
uses in its alcoholic beverage business is a prohibited interest in the
retailer's property, except to the extent a lien or other security interest is
acquired only in the industry member's products sold to the retailer in order
to secure payment of goods sold on credit, if that credit is permissible under
Section 6-5 of the Act.
4)
Guaranteeing Loans. An industry member is prohibited from guaranteeing any loan
or repayment of any financial obligation owed by a retailer, and a retailer is
prohibited from guaranteeing any loan or repayment of any financial obligation
owed by an industry member.
5)
Industry Member Advertising. An industry member shall not give, and a retailer
shall not accept, anything of value in exchange for any advertising service,
including but not limited to:
A) Display space
advertising or placement of ads in a retailer's publications, including a
retailer's website; or
B) Payments
to a third party for advertisements in which the primary purpose of the
advertisement promotes a retailer's business or aspects of the retailer's
business.
d)
Exceptions to the "Of Value" Provisions of Sections 6-5 and 6-6 of the Act.
Having due regard for public health, established trade customs not contrary to
the public interest, the purposes of the Act, and the items or activities
permissible under the "of value" provisions of Sections 6-5 and 6-6,
performance of the following activities or provision of the following items is
permissible under Sections 6-5 and 6-6, as long as the performance or provision
is not conditioned upon an activity or arrangement intended to create a
"tied-house" as defined in 27 USC 305(b).
1)
All licensees shall maintain records on the licensed premises, subject to a
Section
100.130(e)
waiver, for all items furnished to retailers, or received by retailers, under
Sections 6-5 and 6-6 and this Section 100.500 for a period of three years.
Commercial records or invoices may be used to satisfy this recordkeeping
requirement, provided that all required information listed in this subsection
(d)(1) is contained in these commercial records or invoices. These records must
include:
A) The name and address of the
retailer receiving the item;
D) The cost of the
furnished item to the industry member, determined by the invoice price paid by
the industry member; and
E) Charges
to the retailer for any item.
2) Signage. An industry member may provide
signage to a retailer, and a retailer may accept signage from an industry
member, so long as the signage, in the aggregate, does not exceed the number of
signs allowed or the cost adjustment factor dollar limitations under Section
6-6.
3) Product Displays. An
industry member shall not directly or indirectly offer or give anything "of
value" to a retailer, and a retailer shall not directly or indirectly request
or accept anything "of value" from an industry member, in exchange for setting
up product or other displays, or renting displays, shelf, cold box, storage or
warehouse space at a retail establishment (i.e., slotting fee or allowance),
except as specifically permitted by Section 6-6.3. The act by an industry
member of giving or selling product displays to a retailer is permissible if
the total value of the product display does not exceed $300 per brand at any
time per retail location. The value of a product display is the actual cost to
the industry member that initially purchased the product display or, if the
industry member did not purchase the product display, the fair market value of
the product display. Transportation and installation costs are not included in
the $300 value.
A) A product display means any
racks, bins, barrels, casks, coolers (having a fair market value of no more
than $175, with no exterior plumbing or electrical hookup), buckets, glass or
transparent display cases, shelving or similar items whose primary function is
to hold and display alcoholic liquors at point-of-sale, at or on a retail
licensed premises. Product displays may also include "display enhancers" that
are exclusive of trade fixtures and equipment and include only items that
convey the product display sales programming message to consumers. All product
displays, including display enhancers, must cumulatively fall within the dollar
limitation of product displays.
B)
All product displays must bear conspicuous and substantial advertising matter
on the product of the industry member that is permanently inscribed or securely
affixed. The name and address of the retailer may appear on the product
display.
C) Industry members may
not pool or combine dollar limitations to provide a retailer with a product
display in excess of $300 per brand.
D) The giving or selling of product displays
may be conditioned upon the purchase of alcoholic liquor advertised on those
displays in a quantity necessary for the initial completion of the display. No
other condition can be imposed by the industry member on the retailer in order
for the retailer to obtain the product display.
4) Equipment, Fixtures, Furniture and
Supplies. Except as provided under the Act, an industry member cannot give,
lend, lease, furnish or sell furniture, equipment or fixtures to a retailer. An
industry member may sell equipment and supplies to retailers if the equipment
or supplies are sold to the retailer for a price that is not less than the cost
of the equipment or supplies. For purposes of this Section, the cost of
equipment or supplies is the amount that the industry member paid for the
equipment or supplies if the industry member did not acquire them from another
industry member. If the industry member selling equipment or supplies to a
retailer acquired the equipment or supplies from another industry member
(initial selling industry member), the cost of the equipment or supplies is the
amount that the initial selling industry member paid for them. In either case,
if the equipment or supplies were manufactured or produced by an industry
member, the cost of the equipment or supplies is deemed to be the fair market
price of the equipment or supplies. The sale price must be collected from the
retailer by the industry member within 30 days after the date of the sale.
Equipment and supplies includes items such as glassware (or similar containers
made of other material), dispensing accessories, carbon dioxide (and other
gasses used in dispensing equipment), coasters, trays, napkins, cups and
buckets. Dispensing accessories include items such as standards, faucets, cold
plates, rods, vents, taps, tap standards, hoses, washers, couplings, gas
gauges, vent tongues, shanks, check valves, and counter-top branded shot
machines.
5) Quantity Discounting.
Quantity discounting is permissible only if an industry member offers the same
quantity price discount to all similarly situated retailers in the same
geographic area who agree to purchase the required predetermined quantity of
alcoholic liquor of the same brand. A "quantity discount" is when an industry
member offers a retailer a discount at the time of sale based upon an agreement
by which the retailer will purchase a predetermined number of products in
return for receiving a discount on the same goods purchased. However, the
following activities are prohibited:
A) An
industry member may not require a retailer to take and dispose of any quota of
alcoholic liquors. Bona fide quantity discounts shall not be deemed to be quota
sales.
B) An industry member may
not require a retailer to purchase one product in order to purchase another.
This 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 prohibited from selling, at a special combination price, two or
more kinds or brands of products to a retailer provided:
i) The retailer has the option of purchasing
either product at the usual price; and
ii) The retailer is not required to purchase
any product it does not want.
C) The furnishing of free warehousing by
delaying delivery of alcoholic liquors beyond the time that payment for the
product is received, or if a retailer is purchasing on credit as permitted by
Section 6-5 of the Act, as implemented by Section
100.90
of this Part, delaying final delivery of product beyond the close of the 30-day
credit period, is the furnishing of an "of value" service in violation of
Section 6-5.
D) Subsections
(d)(5)(A) through (C) notwithstanding, this Section does not prohibit
legitimate sales programming among or between the industry tiers in which the
primary purpose of the programming is to increase product sales and
merchandising to retailers and is not a subterfuge to provide prohibited "of
value" inducements to a retailer. These legitimate sales programs are lawful
if:
i) Sales incentives are temporary and
designed and implemented to produce product volume growth with
retailers;
ii) The sales incentives
to retailers are based on volume and discounted pricing, including discounts in
the form of cash, credits, rebates, alcoholic liquor products, and product
displays;
iii) The sales incentives
are documented on related sales or credit memoranda; and
iv) The sales incentives are offered to all
similarly situated retailers.
E) The use of product credits and rebates,
such as "end of month", "end of year", "end of period", or other such temporary
cumulative discounts, credits and rebates from an industry member to a retailer
is an adjustment of the purchase price based on volume purchasing and, as such,
is not a violation of Section 6-5 of the Act. These cumulative discounts are
considered to be a form of pricing arrangement; provided they are made pursuant
to a written agreement, entered into at the time of sale; extend for a specific
period of time; are calculated based solely upon the purchases made by the
retailer receiving the cumulative discount; and are documented on related sales
and credit memoranda. If the retailer is part of a group of retailers with
common ownership, however, cumulative discounts, credits or rebates may be
provided in one aggregate payment for all retailers within the common ownership
structure. In this case, the cumulative discount, credit or rebate must be
calculated based upon the volume purchases of each individual retailer, with
supporting documentation that denotes the portion of the discount, credit or
rebate attributable to each individual retailer.
F) "No Charge" Products. Price-to-retailer
sales incentives that include volume-based discounts on the purchase price,
and/or "no charge" products that represent an additional overall discount on
the related alcoholic liquor product purchased, is an adjustment of the
purchase price based on volume purchasing if made at the time of sale, and if
the amount of the product given at no charge with the order is not so great as
to constitute a subterfuge in which the pricing aspect is merely a means to
provide a retailer with a "gift" or "free" product. These transactions are not
a violation of Section 6-5 or 6-6 of the Act. However, "penny deals" and other
such transactions in which the "no charge" or deeply discounted products (i.e.,
$.01 per case) are not related to a corresponding volume purchase are
considered free product and a violation of Section 6-5 or 6-6. Deals regarding
product closeouts and other such deep discounting, non-ordinary business
transactions are not prohibited under this subsection (d)(5)(F). "No charge"
goods must be listed and indicated as such on the invoice to the retailer. The
importing distributor or distributor must have records to support the
volume-based discount and the purchase price. The provisions of Section
100.280 prohibiting a
licensee from giving away alcoholic liquor for commercial purposes is
applicable.
6) Samples.
If a retailer has not purchased a brand of alcoholic liquor from an industry
member during the immediately preceding 12-month period, it is not an "of
value" violation for an industry member to provide that retailer with not more
than 384 ounces of any brand of beer, 3 liters of any brand of wine, and 3
liters of any brand of spirits. These sample requirements do not apply to
consumer tastings.
7) Social Media
Advertising. An industry member may use social media to advertise product
location communications that inform the public where its products may be
purchased (retail locators) and pre-announcing any promotional activity to be
held on a retailer's premises, if otherwise permitted by the Act, provided:
A) The industry member does not give
compensation to, or receive compensation from, directly or indirectly, the
retail license holder for social media advertising.
B) If the social media advertising is a
product location communication, the purpose of the communication must be
limited to allowing a consumer to determine the availability of a specific
product at a retailer. If the social media pre-announces promotional activity
at a retailer's premise, the focus of the social media advertising must be the
product promotion and any reference to the retailer should provide only
necessary information, such as location of the event.
C) The advertisement does not contain the
retail price of the product.
D) All
social media advertising must also comply with all applicable rules and
regulations issued by the Alcohol and Tobacco Tax and Trade Bureau of the
United States Department of the Treasury.
E) The industry member does not offer social
media advertising to a specific retailer to the exclusion of other, similarly
situated retailers.
8)
Industry Member Promotional Events at Retailer Locations. Any promotional event
sponsored by an industry member at a retailer's premises that primarily
promotes the retailer's business and does not promote, or only incidentally
promotes, the industry member's brand or brands of products violates the "of
value" provisions of Section 6-5 of the Act. Industry member promotional events
held at retailer premises must focus on the industry member or brands being
promoted and all reference to the retailer in any advertisement shall be
limited to the name and address of the retailer, which shall be relatively
inconspicuous in relation to the advertisement as a whole. Promotional events
include, but are not limited to, tastings, samplings, bottle signings, public
product launch events, or other similar methods of brand promotion. The
promotions shall be available to all similarly situated retailers without a
purchase requirement imposed upon a retailer.
9) Consumer Advertising Specialties. Consumer
advertising specialties, which are items, including but not limited to trading
stamps, non-alcoholic mixers, pouring racks, ash trays, bottle or can openers,
corkscrews, shopping bags, matches, printed recipes, pamphlets, cards,
leaflets, blotters, postcards, pencils, shirts, caps and visors, that are
intended to be given to and received by the consumer, may be given by an
industry member to a retailer, as long as the retailer gives all the items away
to consumers.
A) The industry member may not,
directly or indirectly, pay or credit the retailer for using or distributing
these items, or for any expense incidental to their use.
B) Only if the retailer pays for the consumer
advertising specialties may the items be retailer-specific. Consumer
advertising specialties must bear conspicuous and substantial advertising
matter about the brand or the industry member.
10) Educational Seminars. An industry member
may give or sponsor educational seminars for employees of retailers either at
the industry member's premises or at the retail establishment. Examples of
these educational seminars include seminars dealing with use of a retailer's
equipment, training seminars for employees of retailers, or tours of the
industry member's plant premises. This subsection (d)(10) does not authorize an
industry member to pay a retailer's expense in conjunction with an educational
seminar (such as travel and lodging). Industry members may provide nominal
hospitality during the event, including meals and local
transportation.
11) Industry
members may service, balance or inspect draft beer, wine or distilled spirits
systems at regular intervals, and may provide labor to replace or install rods,
taps, faucets, fittings and lines in draft beer, wine or distilled spirits
dispensing equipment. However, free cleaning of coils by an industry member or
by a company whose services are paid for by an industry member shall be
considered something of value in violation of Sections 6-5 and 6-6 of the
Act.
12) Courtesy wagons, coil
boxes, cold plates or pumps may be supplied to a retailer, by an industry
member, free of charge one time per year for a one-day period. However, the
industry member shall not supply free beer, wine or distilled spirits to a
retailer for the event.
13)
Courtesy wagons, coil boxes, cold plates or pumps may be supplied to a
retailer, by an industry member, for an event that is given by or under the
auspices or sponsorship of a municipal, religious, charitable, fraternal or
social organization that is a holder of a Special Event License. However, the
industry member shall not supply free beer, wine or distilled spirits to a
retailer for the event.
14) Product
Donations. An industry member may make contributions of cash, alcoholic liquor
products, non-alcoholic products, services, equipment or signs to a
not-for-profit organization, including but not limited to charitable
organizations, religious organizations, trade associations, political
organizations, and fraternal organizations. An industry member may not make
contributions of alcoholic liquor products to any not-for-profit organization
that has a local municipal and State of Illinois retail license. These
donations shall be subject to the following conditions:
A) Donations of alcoholic liquor products may
not be given for commercial purposes. The proof of donative intent is on the
industry member;
B) An industry
member must maintain invoices on its licensed premises for a period of three
years for all alcoholic liquor products donated to not-for-profit
organizations;
C) Signage dollar
limitations contained in Section 6-6 of the Act do not apply to signage and
advertising materials donated to a not-for-profit organization; and
D) Advertising and signage referencing the
industry member must be reasonably commensurate with a donative intent to
ensure that the charitable donation is not being made for a commercial purpose,
in violation of Section 100.280. The proof of donative intent is on the
industry member.
15)
Customized Label for Wine and Spirits Products. Wine or spirits customized
label programs may be offered by industry members to retailers. A customized
label program is defined as a sale in which the retailer purchases a single
barrel of wine or spirits and the retailer has the option of selecting the
product blend, age, estate, barrel or wood type in which the wine or spirits is
stored or aged. Custom label programs must be offered to all similarly situated
retailers who agree to purchase the program, under the following guidelines:
A) All formulas and brand rights to the wine
and spirits products must be owned by industry members; no brand rights to the
wine or spirits product, or exclusive use of the blend or product options, may
be offered to, or accepted by, the retailer;
B) An individual, non-exclusive custom label
may include the retailer's name, provided there is a matching Federal
Certificate of Label Approval and no language on the label or container
suggests or implies that the wine or spirits is exclusive to the retailer;
and
C) Any product displays that
are a part of the customized label program must adhere to the rules on product
displays set forth in subsection (d)(3).
16) Non-Alcoholic Merchandise. An industry
member who is also in business as a bona fide producer or vendor of merchandise
other than "alcohol", "spirits", "wine", "beer" or "alcoholic liquor", as those
terms are defined in Article I of the Act, may furnish, give, sell or offer to
sell that non-alcoholic merchandise to retailers as provided in Section 6-6.3
of the Act. However, non-alcoholic merchandise may not be used by an industry
member to induce or cause a retailer to engage in any activity prohibited by
the Act or this Part.
17) Stocking,
Rotation, Resetting, and Pricing Services
A)
Industry members, at retail licensed establishments, may stock alcoholic
liquors they sell, provided that alcoholic liquor products of other industry
members are not moved, altered or disturbed. This stocking may be done only
during the course of, or within 24 hours after, a regular sales call or
delivery to the retailer. The stocking is considered service incidental to a
sales call or delivery. Stocking is defined as any placing of alcoholic liquors
where they are to be stored or where they are offered for sale.
B) Industry members may rotate their own
alcoholic liquor products at a retailer's premises during the normal course of
a sales call or a delivery. Rotation is defined as moving newer, fresher
product from a storage area to a point-of-sale area and the replenishing of the
point-of-sale area with fresh product. Rotation may be performed at any
location within a retailer's premises.
C) Industry members are permitted to
participate in or be present at merchandising resets conducted at a retailer's
premises no more than four times per year. Resets are defined as large-scale
rearrangement of the alcoholic liquor products at a retailer's premises. During
resets, industry members may stock or restock entire sections of point-of-sale
locations at the retailer's premises. No reset shall occur without at least 14
days prior notice made by the retailer to all industry members whose alcoholic
liquor products are carried by the retailer. Industry members may only move,
alter, disturb or displace their alcoholic liquor products and the products of
properly notified but nonattending industry members.
D) Industry members may provide to retailers
recommended diagrams, shelf plans or shelf schematics that suggest beneficial
display locations for their alcoholic liquor products at the retailer's
premises. Industry members may not condition pricing discounts, credits,
rebates, access to brands, or provision of any other item or activity
permissible under the Act or this Section upon a retailer's choice to implement
or not implement diagrams, shelf plans or shelf schematics.
E) Industry members may not affix prices to
products on behalf of retailers. This prohibition includes the indirect
affixing of prices to product, including entering prices into a retailer's
computer system. This prohibition does not prohibit industry members, after
stocking a shelf, from affixing shelf tags that identify the product and price
of the alcoholic liquor; however, at no time may an industry member delegate or
contract this service to a third party. Shelf tags are considered point-of-sale
advertising materials and are subject to the provisions of Section 6-6 of the
Act. If permitted stocking by an industry member involves movement and a change
in the placement of its product on the retailer's shelf, shelf tags may be
moved to the new position of the product.