PAYMENTS FOR DISPLAY SERVICE BY VENDORS TO RETAILERS (INCLUDING
STATE LIQUOR COMMISSIONS OPERATING RETAIL LIQUOR STORES).
Proprietors of Distilled Spirits Plants,
Wine Producers, Brewers, Wholesale Dealers,
Importers, and others concerned:
Purpose. The purpose of this Industry Circular is to inform
vendors of alcoholic beverages that payments made to retailers,
including State Liquor Control Commissions operating retail liquor
stores, for display space or advertising services may result in
violations of Section 5(b)(4) of the Federal Alcohol Administration
Act (27 U.S.C. 205(b)(4)).
Background. Section 5(b)(4) of the Federal Alcohol
Administration Act prohibits, under the jurisdictional limitations
set forth, producers, importers, or wholesalers of alcoholic
beverages from inducing retailers to purchase products sold by them
to the exclusion of products sold by others in interstate or foreign
commerce by paying or crediting the retailers for any advertising,
display or distribution service. Although this prohibition is not
applicable to any act done by an agency of a State or political
subdivision thereof, it does apply to the acts of industry members
in their relationships with retailers, including state liquor
monopolies. (See Revenue Ruling 56-628, C.B. 1956-2, 1055, and
Revenue Ruling 58-136, C.B. 1958-1, 612.)
General Comment. Although it is impossible to ascertain in
advance whether the proscribed elements of inducement and exclusion
will result from the rental of advertising display space in all
instances, the payment for the service, present in all cases,
constitutes the preliminary and one of the basic elements of the
offense and it would appear obvious that the purpose of purchasing
the display service is to increase sales of the particular brands
displayed and thereby to induce purchases by the retailer or liquor
monopoly.
Conclusion. Industry members are hereby advised of the
Service's views in this regard so that if they are engaging in or
contemplate engaging in the practices described, they may have an
opportunity to govern their actions accordingly.
Inquiries. Correspondence in regard to this Industry
Circular should refer to its number and be addressed to the
Director, Alcohol and Tobacco Tax Division (Attention: CP:AT:B),
Washington 25, D. C.
Dwight E. Avis
Director, Alcohol and Tobacco Tax Division |