Category Management and “Tied House”

Mark Willingham Uncategorized

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Source: TTB

February 11, 2016

 

In response to industry requests for clarification, TTB  has issued general guidance concerning promotional activities commonly associated with category  management programs  and whether or  not those activities are lawful.

 

Specifically, TTB Ruling 2016 -1,  The Shelf Plan and Shelf Schematic Exception to the “Tied House” Prohibition, and Activities Outside Such Exception clarifies what is and  what is not permissible in terms of shelf plans and  shelf schematics.

 

The beverage alcohol industry has been experiencing phenomenal growth with many new, often small, businesses entering the market.  Consequently, maintaining a level playing field has never been more important than  today. We are committed to enforcing our trade practice jurisdiction so that  consumers can  continue to enjoy a  wide selection of products and  industry members can compete for those consumers in a fair and open marketplace.

 

http://www.ttb.gov/rulings/2016-1.pdf

 

The Shelf Plan and Shelf Schematic Exception to the “Tied House” Prohibition, and Activities Outside Such Exception Under 27 U.S.C. 205(b), the “Tied-house” provisions of the Federal Alcohol Administration Act (FAA Act), and 27 CFR part 6, the provision of services by an industry member to a retailer is in certain circumstances prohibited.

 

Section 6.99(b) provides that the act by an industry member of providing a retailer with a recommended shelf plan or shelf schematic for distilled spirits, wine, or malt beverages, however, is not an inducement within the meaning of the FAA Act’s “Tied-house” prohibition.

 

The Alcohol and Tobacco Tax and Trade Bureau (TTB) does not consider § 6.99(b) ambiguous.

 

The plain language of the regulation removes only the act of providing a recommended shelf plan or shelf schematic from the prohibited means to induce enumerated in section 105(b)(3) of the FAA Act.

 

Additional services or items of value do not fall within the § 6.99(b) exception. Therefore, providing such services may constitute a prohibited inducement and, depending on the circumstances,may be deemed to place retailer independence at risk. This Ruling further explains the § 6.99(b) exception and why such additional services or items of value are not entitled to its safe harbor