Bill Text: IL HB0773 | 2009-2010 | 96th General Assembly | Enrolled

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Bill Title: Amends the Beer Industry Fair Dealing Act. Expands the list of prohibited conduct under the Act, as it applies to brewers, to include coercing a wholesaler to sign an agreement by threatening to refuse approval for the wholesaler's business; terminating an agreement because the wholesaler fails to agree to a renewal agreement; and presenting an agreement to the wholesaler that grants the brewer the unilateral right to amend the agreement without the wholesaler's consent. Provides that an agreement between a brewer and wholesaler must state and provide that the agreement is governed by the Beer Industry Fair Dealing Act and other matters. Changes the definition of the term "territory" or "sales territory" to mean the exclusive geographic area (rather than the geographical area) of primary sales responsibility designated by the agreement between a wholesaler and brewer for any brand, brands, or brand extensions (rather than brand or brands) of the brewer. Further adds that the "territory" or "sales territory" designated by the agreement may not be designated by address or specific location unless such specific address or location is part of a general and broad territory or sales territory description. Effective immediately.

Spectrum: Bipartisan Bill

Status: (Passed) 2009-08-25 - Public Act . . . . . . . . . 96-0662 [HB0773 Detail]

Download: Illinois-2009-HB0773-Enrolled.html

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AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Beer Industry Fair Dealing Act is amended by
changing Sections 1.1, 2, and 5 as follows:
(815 ILCS 720/1.1) (from Ch. 43, par. 301.1)
Sec. 1.1. As used in this Act:
(1) "Beer" means a beverage obtained by the alcoholic
fermentation of an infusion or concoction of barley, or other
grain, malt, and hops in water, and includes, among other
things, beer, ale, stout, lager beer, porter and the like. For
purposes of this Act only, the term "beer" shall also include
malt beverage products containing less than one-half of 1% of
alcohol by volume and marketed for adult consumption as an
alternative beverage to beer.
(2) "Agreement" means any contract, agreement,
arrangement, operating standards, or amendments to a contract,
agreement, arrangement, or operating standards, the effect of
which is to substantially change or modify the existing
contract, agreement, arrangement, or operating standards,
whether expressed or implied, whether oral or written, for a
definite or indefinite period between a brewer and a wholesaler
pursuant to which a wholesaler has been granted the right to

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purchase, resell, and distribute as wholesaler or master
distributor any brand or brands of beer offered by a brewer.
The agreement between a brewer and wholesaler shall not be
considered a franchise relationship.
(3) "Wholesaler" or "beer wholesaler" means any person,
other than a manufacturer licensed under the Liquor Control Act
of 1934, who is engaged in this State in purchasing, storing,
possessing or warehousing any alcoholic liquors for resale or
reselling at wholesale, whether within or without this State.
(4) "Brewer" means a person who is engaged in the
manufacture of beer, a master distributor as defined in this
Section, a successor brewer as defined in this Section, a
non-resident dealer under the provisions of the Liquor Control
Act of 1934, a foreign importer under the provisions of the
Liquor Control Act of 1934, or a person who owns or controls
the trademark, brand, or name of beer.
(4.5) "Brand" means any word, name, group of letters,
symbols, or any combination thereof that is adopted and used by
a brewer to identify a specific beer product and to distinguish
that beer product from another beer product.
(4.7) "Brand extension" means any brand that incorporates
all or a substantial part of the features of a pre-existing
brand of the same brewer and that relies to a significant
extent on the good will associated with the pre-existing brand.
(5) "Master Distributor" means a person who, in addition to
being a wholesaler, acts in the same or similar capacity as a

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brewer or outside seller of one or more brands of beer to other
wholesalers on a regular basis in the normal course of
business.
(6) "Successor Brewer" means any person who in any way
obtains the distribution rights that a brewer, non-resident
dealer, foreign importer, or master distributor once had to
manufacture or distribute a brand or brands of beer whether by
merger, purchase of corporate shares, purchase of assets, or
any other arrangement, including but not limited to any
arrangements transferring the ownership or control of the
trademark, brand or name of the brand.
(7) "Person" means a natural person, partnership,
corporation, trust, agency, or other form of business
enterprise. Person also includes heirs, assigns, personal
representatives and guardians.
(8) "Territory" or "sales territory" means the exclusive
geographic area of primary sales responsibility designated by
the an agreement between a wholesaler and brewer for any brand,
or brands, or brand extensions of the brewer. The "territory"
or "sales territory" designated by the agreement may not be
designated by address or specific location unless such specific
address or location is part of a general and broad territory or
sales territory description. The designation of a territory or
sales territory in violation of this subsection is prohibited
by this Act and deemed discriminatory.
(9) "Good cause" exists if the wholesaler or affected party

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has failed to comply with essential and reasonable requirements
imposed upon the wholesaler or affected party by the agreement.
The requirements may not be discriminating either by their
terms or in the methods of their enforcement as compared with
requirements imposed on other similarly situated wholesalers
by the brewer. The requirements may not be inconsistent with
this Act or in violation of any law or regulation.
(10) "Good faith" means honesty in fact and the observance
of reasonable commercial standards of fair dealing in the trade
as defined and interpreted under Section 2-103 of the Uniform
Commercial Code.
(11) "Reasonable standards and qualifications" means those
criteria applied by the brewer to similarly situated
wholesalers during a period of 24 months before the proposed
change in manager or successor manager of the wholesaler's
business.
(12) "Affected party" means a wholesaler, brewer, master
distributor, successor brewer, or any person that is a party to
an agreement.
(13) "Signs" means signs described in Section 6-6 of the
Liquor Control Act of 1934.
(14) "Advertising materials" means advertising materials
described in Section 6-6 of the Liquor Control Act of 1934.
(Source: P.A. 95-240, eff. 8-17-07; 95-789, eff. 8-7-08.)
(815 ILCS 720/2) (from Ch. 43, par. 302)

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Sec. 2. Purposes. The purposes and scope of this Act are:
(A) This Act is promulgated pursuant to authority of the
State under the provisions of the Twenty-First Amendment to the
United States Constitution to promote the public's interest in
fair, efficient and competitive distribution of malt beverage
products by regulation and encouragement of brewer and
wholesaler vendors to conduct their business relations toward
these ends by:
(i) assuring the beer wholesaler is free to manage its
business enterprise, including the wholesaler's right to
independently establish its selling prices; and
(ii) assuring the brewer and the public of service from
wholesalers who will devote reasonable efforts and
resources to sales and distribution of all the brewer's
products, which wholesaler has been granted the right to
sell and distribute and maintain satisfactory sales
levels.
(B) This Act shall be incorporated into and shall be deemed
a part of every agreement between brewers and wholesalers and
shall govern all relations between brewers and their
wholesalers to the full extent consistent with the
constitutions and laws of this State and the United States and
any provision of this Act shall supersede any conflicting
provision of the agreement.
(Source: P.A. 91-247, eff. 7-22-99.)

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(815 ILCS 720/5) (from Ch. 43, par. 305)
Sec. 5. Prohibited conduct. No brewer shall:
(1) Induce or coerce, or attempt to induce or coerce,
any wholesaler to engage in any illegal act or course of
conduct either by threatening to amend, modify, cancel,
terminate, or refuse to renew any agreement existing
between the brewer and the wholesaler, or by any other
means.
(2) Require a wholesaler to assent to any unreasonable
requirement, condition, understanding or term or an
agreement prohibiting a wholesaler from selling the
product of any other brewer or brewers.
(3) Directly or indirectly fix or maintain the price at
which a wholesaler may resell beer.
(4) Fail to provide to each wholesaler of its brands a
written contract which embodies the brewer's agreement
with its wholesalers and conforms to the provisions of this
Act.
(5) Require any wholesaler to accept delivery of any
beer, signs, advertising materials, or any other item or
commodity which has not been ordered by the wholesaler, or
require any wholesaler to accept a common carrier for
delivery of beer into this State unless the wholesaler
consents to the common carrier. In the event a brewer
adopts a uniform practice of delivering beer into this
State to the premises of all licensed wholesalers, the

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brewer may select the common carrier in this State.
(6) Require a wholesaler without the wholesaler's
approval to participate in an arrangement for the payment
or crediting by an electronic fund transfer transaction for
any item or commodity other than beer or to access a
wholesaler's account for any item or commodity other than
beer.
(7) Require a wholesaler to assent to any requirement
prohibiting the wholesaler from disposing, after notice to
the brewer, of a product which has been deemed salvageable
by a local or State health authority. Nothing herein shall
prohibit the brewer from having the first right to purchase
the salvageable product from the wholesaler at a price not
to exceed the original cost of the product or to
subsequently repurchase the product from the insurance
company or salvage company.
(8) Refuse to approve or require a wholesaler to
terminate a manager or successor manager without good
cause. A brewer has good cause only if the person
designated as manager or successor manager by the
wholesaler fails to meet reasonable standards and
qualifications.
(9) Present an agreement to a wholesaler that attempts
to waive compliance with any provision of this Act or that
requires the wholesaler to waive compliance with any
provision of this Act. A wholesaler entering into an

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agreement containing provisions in conflict with this Act
shall not be deemed to waive compliance with any provision
of this Act. No brewer shall induce or coerce, or attempt
to induce or coerce, any wholesaler to assent to any
agreement, amendment, renewal, or replacement agreement
that does not comply with this Act and the laws of this
State.
(10) Terminate or attempt to terminate an agreement on
the basis that the wholesaler refuses to purchase signs or
advertising materials or any quantity or types thereof.
(11) Discriminate against a wholesaler who has entered
into a contract relative to signs or advertising materials
by not making signs or advertising materials or any
quantity or types thereof available to the wholesaler when
the brewer makes available such signs or advertising
materials to other similarly situated wholesalers in this
State.
(12) Present an agreement requiring the wholesaler to
arbitrate all disputes without offering the wholesaler in
writing the opportunity to reject arbitration and elect to
resolve all disputes by maintaining a civil suit in
accordance with this Act.
(13) Fail to assign brand extensions to a wholesaler
who has been granted the territory to the brand from which
the brand extension resulted and agrees to accept the brand
extension; however, this requirement does not apply if the

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wholesaler is not in compliance with the agreement at the
time the brewer offers the brand extension to the
wholesaler.
(14) Terminate, cancel, or non-renew or attempt to
terminate, cancel, or non-renew an agreement on the basis
that the wholesaler fails to agree or consent to an
amendment at the time such amendment is presented to the
wholesaler. A brewer may amend an agreement including
operating standards at any time without the wholesaler's
consent if such amendment does not materially,
substantially, and adversely affect the wholesaler and
such amendment is effective as to all wholesalers of the
brewer in the State.
(15) Coerce or attempt to coerce a transferring
wholesaler to sign a renewal agreement, replacement
agreement, or an amendment to an agreement by threatening
to refuse to approve or delay issuing an approval for the
sale or transfer of a wholesaler's business.
The agreement must provide in substance that the agreement
shall be governed by all applicable provisions of State law,
and that such State law is incorporated into the agreement,
shall be deemed to be a part thereof, and shall supercede any
provision of the agreement in conflict with such State law. If
an agreement presented to the wholesaler does not provide this
provision in substance the brewer must furnish an executed
Illinois addendum to the wholesaler stating that the agreement

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shall be governed by all applicable provisions of State law,
and that such State law is incorporated into the agreement,
shall be deemed to be a part hereof, shall supercede any
provision of the agreement in conflict with such State law, and
shall govern and control.
No brewer who, pursuant to an agreement with a wholesaler
which does not violate antitrust laws, has designated a sales
territory for which the wholesaler is exclusively responsible
or in which the wholesaler is required to concentrate its
efforts, shall enter into an agreement with any other
wholesaler for the purpose of establishing an additional
wholesaler for the brewer's brand, brands, or brand extension
in the territory.
No wholesaler who, pursuant to an agreement is granted a
sales territory for which it shall be exclusively responsible
or in which it is required to concentrate its efforts, shall
make any sale or delivery of beer to any retail licensee whose
place of business is not within the territory granted to the
wholesaler.
(Source: P.A. 95-240, eff. 8-17-07.)
Section 99. Effective date. This Act takes effect upon
becoming law.