PARTICIPATION BY INDUSTRY MEMBERS IN RETAILER ASSOCIATIONS
AND TRADE-BUYER EMPLOYEE ASSOCIATION ACTIVITIES
Proprietors of Distilled Spirits Plants, Bonded Wine Cellars,
Taxpaid Wine Bottling Houses; Brewers, Importers, Whole-
sale Malt Liquor Dealers, Wholesale Liquor Dealers and
Others Concerned:
Purpose. This circular is to advise industry members
that ATF Ruling 76-23 will be published in the November issue
of the ATF Bulletin. The ruling supersedes Revenue Rulings
54-130 and 54-391 and reads substantially as follows:
As a result of numerous inquiries, the Bureau
of Alcohol, Tobacco and Firearms recognizes the
need to restate its position concerning participa-
tion by producers, importers, or wholesalers of
alcoholic beverages in the activities of retailer
associations and trade-buyer employee associations.
In this regard, several retail associations have
requested the Bureau to comment on their solicita-
tion of support from such industry members in
connection with advertising in trade publications,
dues collection, and participation in association
conventions, expositions, trade shows, etc.
In general, sections 5(b) and (c) of the
Federal Alcohol Administration Act make it unlaw-
ful for any producer, bottler, importer, or whole-
saler of alcoholic beverages, directly or indirectly
or through an affiliate, to induce any retailer
to purchase alcoholic beverages from him to the
exclusion, in whole or in part, of any such products
sold or offered for sale by other persons in
interstate or foreign commerce by means of "Tied
house" or "Commercial bribery." The provisions of
section 5(c) of the Act also make such practices
unlawful when engaged in with wholesalers (trade
buyers).
Held, in view of the fact that the benefits
resulting from payments, gifts, or services
rendered by producers, importers, or wholesalers
to retailer groups or associations or trade-
buyer employee associations flow to the individual
members thereof, the Bureau holds that sections
5(b) and (c) of the Federal Alcohol Administration
Act apply not only to transactions involving
individual retailers but also to these practices
when directed toward groups or associations of
retailers or trade-buyer employees. Accordingly,
when payments, gifts, or services so rendered result
in alcoholic beverages being purchased from the
participating industry member to the exclusion,
in whole or part, of any such products sold or
offered for sale by other persons in interstate or
foreign commerce, a violation of the Act would
ensue. The following activities, among others,
may result in violations as discussed above:
(1) Contributions made by producers, importers,
or wholesalers for advertisements in
publications controlled or sponsored by
groups or associations of retailers,
or payments or gratuities tendered by
such producers, importers, or wholesalers
to groups or associations of trade-buyer
employees.
(2) Collection of dues by members of a
wholesale liquor dealers' association
from retailers on behalf of a retail
liquor dealers' association.
(3) Payments, contributions, or gratuities
made by industry members to associations
of retail dealers to underwrite conven-
tion, exposition, or trade show activities,
such as:
(a) Rental of display booth space
through the association.
(b) Purchase of tickets and/or payment
of registration fees at excessive
or discriminatory rates or in
excessive numbers.
(c) Cash donations.
(d) Subsidizing cost of publications.
(e) Providing alcoholic beverages for
association hospitality rooms.
(f) Paying for or sharing cost of luncheons,
dinners, banquets, cocktail parties,
dances, entertainment, or other social
functions sponsored by the association.
It is not the Bureau's intention to preclude
industry members from legitimate participation in
activities such as displaying their products, paying
registration fees consistent with those paid by all
participants, or otherwise participating in retail
association or trade-buyer employee association
activities. However, any payments, gifts, or services
rendered as outlined in paragraphs (1) through (3)
above will be considered as proscribed inducements.
Rev. Rul. 54-130, 1954-1 C.B. 338 (Internal
Revenue) and Rev. Rul. 54-391, 1954-2 C.B. 579
(Internal Revenue) are hereby superseded.
Inquiries. Inquiries concerning this circular should refer
to its number and be addressed to the Assistant Director, Regula-
tory Enforcement, Bureau of Alcohol, Tobacco and Firearms,
1200 Pennsylvania Avenue, NW, Washington, DC 20226.
Rex D. Davis
Director
GPO 909-448 |