96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB1282

 

Introduced 2/10/2009, by Sen. Terry Link

 

SYNOPSIS AS INTRODUCED:
 
235 ILCS 5/6-9   from Ch. 43, par. 126
815 ILCS 720/7   from Ch. 43, par. 307

     Amends the Liquor Control Act of 1934. Contains language concerning registration requirements for non-resident dealers and foreign importers of alcoholic liquors who are not manufacturers. Amends the Beer Industry Fair Dealing Act. Provides that provisions concerning reasonable compensation and arbitration apply only if the brewer agrees to pay reasonable compensation as defined under the Act and the total annual volume of all beer products supplied by a brewer to a wholesaler pursuant to agreements between such brewer and wholesaler represents 10% (rather than 20%) or less of the total annual volume of the wholesaler's business for all beer products supplied by all brewers, provided that such 10% volume of all beer products supplied by the wholesaler to the retailer does not exceed 10% of annual gross receipts. Makes other changes. Effective immediately.


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A BILL FOR

 

SB1282 LRB096 08404 KTG 18516 b

1     AN ACT concerning business.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Liquor Control Act of 1934 is amended by
5 changing Section 6-9 as follows:
 
6     (235 ILCS 5/6-9)  (from Ch. 43, par. 126)
7     Sec. 6-9. Registration of trade marks; sale within
8 geographical area; delivery to authorized persons. The
9 Legislature hereby finds and declares that for purposes of
10 ensuring the preservation and enhancement of interbrand
11 competition in the alcoholic liquor industry within the State,
12 ensuring that importation and distribution of alcoholic liquor
13 in the State will be subject to thorough and inexpensive
14 monitoring by the State, reducing the importation of illicit or
15 untaxed alcoholic liquor into the State, excluding misbranded
16 alcoholic liquor products from the State, providing incentives
17 to distributors to service and sell to larger numbers of retail
18 licensees in the geographic area where such distributors are
19 engaged in business, and reducing the amount of spoiled and
20 overaged alcoholic liquor products sold to consumers, it is
21 necessary to restrict the purchase of alcoholic liquors at
22 wholesale in the State to those persons selected by the
23 manufacturer, distributor, importing distributor or foreign

 

 

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1 importer who owns or controls the trade mark, brand or name of
2 the alcoholic liquor products sold to such persons, and to
3 restrict the geographic area or areas within which such persons
4 sell such alcoholic liquor at wholesale, as provided in this
5 Section.
6     Each manufacturer, non-resident dealer, distributor,
7 importing distributor, or foreign importer who owns or controls
8 the trade mark, brand or name of any alcoholic liquor shall
9 register with the State Commission, in the Chicago office, on
10 or before the effective date, the name of each person to whom
11 such manufacturer, non-resident dealer, distributor, importing
12 distributor, or foreign importer grants the right to sell at
13 wholesale in this State any such alcoholic liquor, specifying
14 the particular trade mark, brand or name of alcoholic liquor as
15 to which such right is granted, the geographical area or areas
16 for which such right is granted and the period of time for
17 which such rights are granted to such person. Each
18 manufacturer, non-resident dealer, distributor or importing
19 distributor, or foreign importer who is required to register
20 under this Section must furnish a copy of the registration
21 statement at the time of appointment to the person who has been
22 granted the right to sell alcoholic liquor at wholesale.
23 However, if a person who has been appointed the right to sell
24 alcoholic liquor at wholesale does not receive a copy of the
25 registration statement as required under this Section, such
26 person may file a registration statement with the State

 

 

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1 Commission, provided that the person furnishes a copy of that
2 registration statement to the manufacturer, non-resident
3 dealer, distributor, importing distributor, or foreign
4 importer within 30 days of filing the registration statement.
5 The registration statement shall state:
6     (1) the name of the person appointed;
7     (2) the name of the manufacturer, non-resident dealer,
8 distributor, importing distributor, or foreign importer from
9 whom the person received the right to sell alcoholic liquor;
10     (3) the particular trade mark, brand, or name of alcoholic
11 liquor as to which the right to sell at wholesale is granted;
12 and
13     (4) the geographical areas for which the right to sell at
14 wholesale is granted.
15     Such manufacturer, non-resident dealer, distributor,
16 importing distributor, or foreign importer may grant the right
17 to sell at wholesale any trade mark, brand or name of any
18 alcoholic liquor in any geographical area to more than one
19 person. If the registration is received after the effective
20 date, the Commission shall treat the date the registration was
21 received in the Chicago office as the effective date. Such
22 registration shall be made on a form prescribed by the State
23 Commission and the State Commission may require such
24 registration to be on a form provided by it.
25     A non-resident dealer or foreign importer who is not a
26 manufacturer shall file the registration statement jointly

 

 

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1 with the manufacturer identifying the person authorized by the
2 manufacturer to sign the registration statement on behalf of
3 the manufacturer.
4     No such registration shall be made in any other manner than
5 as is provided in this Section and only those persons
6 registered by the manufacturer, non-resident dealer,
7 distributor, importing distributor or foreign importer, shall
8 have the right to sell at wholesale in this State, the brand of
9 alcoholic liquor specified on the registration form.
10     However, a licensed Illinois distributor who has not been
11 registered to sell a brand of alcoholic liquor, but for a
12 period of 2 years prior to November 8, 1979 has been engaged in
13 the purchase of a brand for resale from a licensed Illinois
14 distributor who has the right to sell that brand at wholesale,
15 may continue to purchase and resell the brand at wholesale, and
16 may purchase from the same distributor and resell at wholesale
17 any new brands of the same manufacturer, provided that:
18         (1) Within 60 days after November 8, 1979 he identifies
19     the brand which he so purchased to the State Commission and
20     the Commission within 30 days thereafter verifies that the
21     purchases have occurred;
22         (2) Thereafter, he notifies the State Commission in
23     writing of any brands of the same manufacturer which he
24     wishes to purchase from the same distributor that were not
25     available for distribution on or before November 8, 1979,
26     and that the Commission within 30 days of such notification

 

 

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1     verifies that the brand is a new brand of the same
2     manufacturer, and that the same licensed Illinois
3     distributor has the right to sell the new brand at
4     wholesale;
5         (3) His licensed business address is within the
6     geographical area for which the licensed Illinois
7     distributor from whom the purchases are made has the right
8     to sell said brand or brands of alcoholic liquor; and
9         (4) His sales are made within the geographical area for
10     which the licensed Illinois distributor from whom the
11     purchases are made has the right to sell the brand or
12     brands of alcoholic liquor and only to retail licensees
13     whose licensed premises are located within the
14     aforementioned geographical area.
15     No person to whom such right is granted shall sell at
16 wholesale in this State any alcoholic liquor bearing such trade
17 mark, brand or name outside of the geographical area for which
18 such person holds such selling right, as registered with the
19 State Commission, nor shall he sell such alcoholic liquor
20 within such geographical area to a retail licensee if the
21 premises specified in such retailer's license are located
22 outside such geographical area. Any licensed Illinois
23 distributor who has not been granted the right to sell any
24 alcoholic liquor at wholesale and is purchasing alcoholic
25 liquor from a person who has been granted the right to sell at
26 wholesale may sell and deliver only to retail licensees whose

 

 

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1 licensed premises are within the same geographical area as the
2 person who has been granted the right to sell at wholesale.
3     No manufacturer, importing distributor, distributor,
4 non-resident dealer, or foreign importer shall sell or deliver
5 any package containing alcoholic liquor manufactured or
6 distributed by him for resale, unless the person to whom such
7 package is sold or delivered is authorized to receive such
8 package in accordance with the provisions of this Act.
9 (Source: P.A. 92-105, eff. 1-1-02.)
 
10     Section 10. The Beer Industry Fair Dealing Act is amended
11 by changing Section 7 as follows:
 
12     (815 ILCS 720/7)  (from Ch. 43, par. 307)
13     Sec. 7. Reasonable compensation.
14     (1) Subject to the right of any party to an agreement to
15 pursue any remedy provided in Section 9, any Any brewer that
16 cancels, terminates or fails to renew any agreement, or
17 unlawfully denies approval of, or unreasonably withholds
18 consent, to any assignment, transfer or sale of a wholesaler's
19 business assets or voting stock or other equity securities,
20 except as provided in this Act, shall pay the wholesaler with
21 which it has an agreement pursuant to this Act reasonable
22 compensation for the fair market value of the wholesaler's
23 business with relation to the affected brand or brands. The
24 fair market value of the wholesaler's business shall include,

 

 

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1 but not be limited to, its goodwill, if any.
2     (1.5) The provisions of this subsection (1.5) shall only
3 apply if the brewer agrees to pay reasonable compensation as
4 defined in subsection (1) and when the total annual volume of
5 all beer products supplied by a brewer to a wholesaler pursuant
6 to agreements between such brewer and wholesaler represents 10%
7 20% or less of the total annual volume of the wholesaler's
8 business for all beer products supplied by all brewers,
9 provided that such 10% volume of all beer products supplied by
10 the wholesaler to the retailer does not exceed 10% of annual
11 gross receipts. For purposes of this subsection (1.5) only,
12 "annual volume" means the volume of beer products sold by the
13 wholesaler in the 12-month period immediately preceding
14 receipt of the brewer's written offer pursuant to this
15 subsection (1.5) and "annual gross receipts" means the revenues
16 received by the wholesaler from beer products sold by the
17 wholesaler in the 12-month period immediately preceding
18 receipt of brewer's written offer pursuant to this subsection
19 (1.5).
20     If a brewer is required to pay reasonable compensation as
21 described in subsection (1) and the question of reasonable
22 compensation is the only issue between the parties, the brewer
23 shall, in good faith, make a written offer to pay reasonable
24 compensation. The wholesaler shall have 30 days from receipt of
25 the written offer to accept or reject the brewer's offer.
26 Failure to respond, in writing, to the written offer shall

 

 

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1 constitute rejection of the offer to pay reasonable
2 compensation. If the wholesaler, in writing, accepts the
3 written offer, the wholesaler shall surrender the affected
4 brand or brands to the brewer at the time payment is received
5 from the brewer. If the wholesaler does not, in writing, accept
6 the brewer's written offer, either party may elect to submit
7 the determination of reasonable compensation to expedited
8 binding arbitration. If one party notifies the other party in
9 writing that it elects expedited binding arbitration, the other
10 party has 10 days from receipt of the notification to elect
11 expedited binding arbitration or to reject the arbitration in
12 writing. Failure to elect arbitration shall constitute
13 rejection of the offer to arbitrate.
14         (A) If the parties agree to expedited binding
15     arbitration, the arbitration shall be subject to the
16     expedited process under the commercial rules of the
17     American Arbitration Association. The arbitration shall be
18     concluded within 90 days after the parties agree to
19     expedited binding arbitration under this Section, unless
20     extended by the arbitrator or one of the parties. The
21     wholesaler shall retain the affected brand or brands during
22     the period of arbitration, at the conclusion of which the
23     wholesaler shall surrender the affected brand or brands to
24     the brewer upon payment of the amount determined to be
25     reasonable compensation, provided the wholesaler shall
26     transfer the affected brand or brands to the brewer after

 

 

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1     90 days if the arbitration proceedings are extended beyond
2     the 90 day limit at the request of the wholesaler.
3     Arbitration costs shall be paid one-half by the wholesaler
4     and one-half by the brewer. The award of the arbitrator
5     shall be final and binding on the parties.
6         (B) If the brewer elects expedited binding arbitration
7     but the wholesaler rejects the offer to arbitrate:
8             (i) The wholesaler may accept, in writing, any
9         written offer previously made by the brewer. If the
10         wholesaler selects this option, the wholesaler must
11         surrender the affected brand or brands to the brewer at
12         the time payment is received. If the wholesaler
13         believes that the amount paid by the brewer is less
14         than reasonable compensation under subsection (1), the
15         wholesaler may bring a proceeding under subsection (2)
16         for the difference, but may not proceed under
17         subsection (3) of Section 9; or
18             (ii) The wholesaler may proceed against the brewer
19         under Section 9, provided the wholesaler must
20         surrender the affected brand or brands to the brewer if
21         a proceeding under Section 9 has not been initiated
22         within 90 days after the wholesaler rejects the offer
23         to arbitrate. Upon determination of reasonable
24         compensation pursuant to Section 9, the brewer shall
25         pay the wholesaler the amount so determined. Until
26         receiving payment from the brewer of the amount so

 

 

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1         determined, the wholesaler shall retain the affected
2         brand or brands. If (a) the wholesaler retains the
3         affected brand or brands for a period of 2 years after
4         the wholesaler rejects the offer to arbitrate, (b) the
5         amount of reasonable compensation has not been
6         determined, and (c) an injunction has not been issued,
7         the brewer shall, in good faith, make a payment of
8         reasonable compensation to the wholesaler. Upon
9         receipt of this payment, the wholesaler must surrender
10         the affected brand or brands to the brewer, provided
11         that such surrender shall not affect the brewer's
12         obligation to pay all amounts ultimately determined
13         due to the wholesaler under this Act.
14         (C) If the wholesaler elects expedited binding
15     arbitration but the brewer rejects, the brewer may proceed
16     under Section 9 for the purpose of determining reasonable
17     compensation. Upon determination of reasonable
18     compensation pursuant to Section 9, the brewer shall pay
19     the wholesaler the amount so determined. Until receiving
20     payment from the brewer of the amount so determined, the
21     wholesaler shall retain the affected brand or brands. If
22     (a) the brewer initiates a proceeding under Section 9
23     within 90 days after the wholesaler rejects the offer to
24     arbitrate, (b) the wholesaler retains the affected brand or
25     brands for a period of 2 years from the date the wholesaler
26     rejects the offer to arbitrate, (c) the amount of

 

 

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1     reasonable compensation has not been determined, and (d) an
2     injunction has not been issued, the brewer shall, in good
3     faith, make a payment of reasonable compensation to the
4     wholesaler. If, however, the brewer fails to ship or make
5     available brands ordered by the wholesaler prior to receipt
6     of payment, the wholesaler shall be entitled to injunctive
7     relief and attorneys' fees and shall subject the brewer to
8     punitive damages. Upon receipt of this payment, the
9     wholesaler must surrender the affected brand or brands to
10     the brewer, provided that such surrender shall not affect
11     the brewer's obligation to pay all amounts ultimately
12     determined due to the wholesaler under this Act.
13     (2) Except as otherwise provided in subsection (1.5), in
14 the event that the brewer and the beer wholesaler are unable to
15 mutually agree on the reasonable compensation to be paid for
16 the value of the wholesaler's business, as defined in this Act,
17 either party may maintain a civil suit as provided in Section 9
18 or the matter may, by mutual agreement of the parties, be
19 submitted to a neutral arbitrator to be selected by the parties
20 and the claim settled in accordance with the rules provided by
21 the American Arbitration Association. Arbitration costs shall
22 be paid one-half by the wholesaler and one-half by the brewer.
23 The award of the arbitrator shall be final and binding on the
24 parties.
25 (Source: P.A. 89-716, eff. 2-21-97.)
 
26     Section 99. Effective date. This Act takes effect upon

 

 

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1 becoming law.