Product Displays
Proprietors of Distilled Spirits Plants, Bonded Wine Cellars,
Breweries, and Wholesalers/Importers of Distilled Spirits, Wine and
Malt Beverages:
Purpose. This circular is issued to inform the above
proprietors of the Bureau of Alcohol, Tobacco and Firearms' policy
concerning product displays.
Background. Things of value supplied by industry members to
retailers are prohibited, both by law (26 USC § 205 (b)(3)) and
regulation (27 CFR § 6.41) under the Federal Alcohol Administration
(FAA) Act, if the other elements of the statute can be
established. Only those things of value specifically listed under
Subpart D of 27 CFR Part 6, as exceptions, are allowable. However,
there appears to be same confusion among industry members
concerning those things of value which are prohibited by 27 CFR
6.41 and those which are allowable as exceptions under Subpart D,
specifically those allowable as product displays under 27 CFR
§ 6.83.
According to 27 CFR § 6.83, product displays are "any wine racks,
bins, barrels, casks, shelving, and the like from which distilled
spirits, wine, or malt beverages are displayed and sold." The key
words in this definition are "from which." All of the examples
given are items on which products either rest or are stacked. Each
of these items possess the capability of storing or containing
products. Therefore, the fact that an item has the capability to
hold or contain distilled spirits, wine or malt beverages is the
major determining factor in our decision to allow an item as a
"product display."
In addition, we take into consideration other factors such as the
direct physical contact of the item with the product, the current
per brand dollar limitation and the fact that the item bears
conspicuous and substantial advertising matter.
Finally, the similarity which exists between the item and those
acceptable product displays specified in 27 CSR § 6.83 is also
considered. The phrase "and the like," which is contained in 27
CFR § 6.83, is interpreted to mean that those items most similar to
"wine racks, bins, barrels, casks [or] shelving," are allowable as
"product displays." On the other hand, those items which bear
little or no physical or functional resemblance to those displays
specified in 27 CFR § 6.83 are not allowable.
Some examples of items which are not allowable as "product
displays" under 27 CFR § 6.83 are blenders, motorcycles, bicycles
which contain baskets filled with products, televisions and
videocassette recorders. These examples bear little, if any,
physical or functional resemblance to those displays enumerated in
27 CFR § 6.83.
Also, the trade practice regulations which were revised and
finalized in 1980 increased the dollar limitation set by 27 CFR
§ 6.83. The preamble to these regulations (T.D. ATF-74)
specifically addressed the reason why the dollar limitation on
product displays was increased. According to this preamble, the
Bureau liberalized the dollar limitation to enable industry members
to furnish better product displays (e.g. displays made of wood
instead of cardboard). The Bureau did not intend for this
liberalization to allow "items of obvious value such as boats,
televisions, or the like," as stated in the preamble. Accordingly,
product displays must possess both physical and functional
resemblance to the examples specified in 27 CFR § 6.83.
Industry should note that 27 CFR 6.81 prohibits an industry
member from providing a "product display" to a retailer if the
furnishing of the item is "conditioned on the purchase of distilled
spirits, wine or malt beverages." Therefore, a determination as to
whether an item qualifies as a "product display" is not necessary,
if it is found that the item was provided conditionally on the
purchase of the industry member's product.
In summary, product displays are allowable if they meet the
requirements of 27 CFR § 6.83. Product displays must possess the
capability of storing or containing distilled spirits, wine or malt
beverages, as well as maintain direct physical contact with the
product itself. Finally, those items which bear little or no
physical or functional resemblance to those displays specified in
27 CFR § 6.83 are not allowable. Those displays which are not
allowable will be considered a means to induce and could lead to
tied-house violations under the FAA Act, if the other elements of
exclusion and interstate or foreign commerce (similar state law
must exist for malt beverage products) can be established.
Inquiries. Inquiries concerning this circular should refer to the
circular number and be addressed to the Bureau of Alcohol, Tobacco
and Firearms, 1200 Pennsylvania Avenue, NW, Washington DC 20226,
ATTN: Tax and Trade Compliance Branch.
Stephen E. Higgins
Director |