16 TAC §45.110
The Texas Alcoholic Beverage Commission proposes an amendment
to §45.110, relating to inducements. The proposed amendment would allow,
but not require, suppliers of alcoholic beverages to calculate the price of
their product by reference to the volume of sales to multiple locations under
a common ownership without violating statutory proscriptions against the provision
of inducements or excessive discounts to retailers.
Lou Bright, General Counsel, has determined that for the first five year
period this rule is in effect there will be no fiscal implications for state
or local governments as a result of enforcing the rule. The rule does not
compel behavior that causes an adverse fiscal impact on small businesses.
However, the rule authorizes adjusting the price of alcoholic beverages in
relation to the volume of sales. Some suppliers may, therefore, choose to
offer large retailers more favorable terms of sale than are offered to small
retailers. The degree to which such practices will impact small businesses
cannot be calculated because it is a function of the pricing schedules and
practices adopted by individual suppliers.
Mr. Bright has determined that the public will potentially benefit by this
action because the proposed amendment will give alcoholic beverage suppliers
greater latitude in setting prices for their products.
Comments may be directed to Lou Bright, General Counsel, Texas Alcoholic
Beverage Commission, P.O. Box 13127, Austin, Texas 78711.
This rule is proposed under §5.31 of the Texas Alcoholic
Beverage Code, which gives the commission the authority to prescribe and publish
rules necessary to carry out the provisions of the Alcoholic Beverage Code.
Cross Reference: Sections 102.07 and 108.06 of the Alcoholic Beverage Code
are affected by this amendment.
§45.110.Inducements.
(a)
General. This rule is enacted pursuant to §§102.04,
102.07, 102.12 and 108.06.
(b)
This rule applies to members of the manufacturing and wholesale
tiers for all alcoholic beverages.
(c)
Inducements. Notwithstanding any other provision of these
rules, practices and patterns of conduct that place retailer independence
at risk constitute an illegal inducement as that term is used in the Alcoholic
Beverage Code. Examples of unlawful inducements are:
(1)
purchasing or renting shelf, floor or warehouse space from
or for a retailer;
(2)
requiring a retailer to purchase one product in order to
be allowed to purchase another product at the same time;
(3)
providing or purchasing, in whole or in part, any type
of advertising benefiting any specific retailer;
(4)
furnishing food and beverages, entertainment or recreation
to retailers or their agents or employees except under the following conditions:
(A)
the value of food, beverages, entertainment and recreation
shall not exceed $500.00 per person on any one occasion; and
(B)
food, beverages, entertainment and recreation provided
may only be consumed or enjoyed in the immediate presence of both the providing
upper tier member and the receiving retail tier member; and
(C)
in the course of providing food, beverages, entertainment
or recreation under this rule, upper tier members may only furnish ground
transportation.
(D)
food, beverages, recreation and entertainment may also
be provided during attendance at a convention, conference, or similar event
so long as the primary purpose for the attendance of the retailer at such
event is not to receive benefits under this rule.
(E)
each upper tier member shall keep complete and accurate
records of all expenses incurred for retailer entertainment for two years.
(5)
furnishing of service trailers with equipment to a retailer;
or
(6)
furnishing transportation or other things of value to organized
groups of retailers. Members of the manufacturing and distribution tiers may
advertise in convention programs, sponsor functions or meetings and other
participate in meetings and conventions of trade associations of general membership.
(d)
Criteria for determining retailer independence. The following
criteria shall be used as a guideline in determining whether a practice or
pattern of conduct places retailer independence at risk. The following criteria
are not exclusive, nor does a practice need to meet all criteria in order
to constitute an inducement.
(1)
The practice restricts or hampers the free economic choice
of a retailer to decide which products to purchase or the quantity in which
to purchase them for sale to consumers.
(2)
The retailer is obligated to participate in a program offered
by a member of the manufacturing or wholesale tier in order to obtain that
member's product.
(3)
The retailer has a continuing obligation to purchase or
otherwise promote the industry member's product.
(4)
The retailer has a commitment not to terminate its relationship
with a member of the manufacturing or wholesale tier with respect to purchase
of that member's products.
(5)
The practice involves a member of the manufacturing or
wholesale tier in the day-to-day operations of the retailer. For example,
the member controls the retailer's decisions on which brand of product to
purchase, the pricing of products, or the manner in which the products will
be displayed on the retailer's premises.
(6)
The practice is discriminatory in that it is not offered
to all retailers in the local market on the same terms without business reasons
present to justify the difference in treatment.
(e)
Calculating the price of alcoholic
beverages by reference to the volume of sales to multiple locations under
a common ownership does not constitute an unlawful inducement or an excessive
discount.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on March 7, 2005.
TRD-200501005
Alan Steen
Administrator
Texas Alcoholic Beverage Commission
Earliest possible date of adoption: April 17, 2005
For further information, please call: (512) 206-3204