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91_HB0941ham002
LRB9103486LDmbam01
1 AMENDMENT TO HOUSE BILL 941
2 AMENDMENT NO. . Amend House Bill 941 by replacing
3 everything after the enacting clause with the following:
4 "Section 1. Short title. This Act may be cited as the
5 Cigarette Sales Act.
6 Section 5. Legislative findings. The General Assembly
7 hereby finds and declares as follows:
8 (a) Cigarettes, because of their standardized character,
9 their great popularity, their widespread and varied types of
10 markets and methods of distribution, and the sensitivity of
11 their distribution to price fluctuations, possess a distinct
12 marketing character and the economic facts and circumstances
13 peculiar to their distribution require special and
14 individualized treatment of the problems created by the sale
15 of cigarettes below cost.
16 (b) The legislature hereby finds that it is necessary to
17 regulate and control the sales price of cigarettes within the
18 State at the wholesale level for the purpose of stabilizing
19 the cigarette industry in Illinois.
20 The legislature finds that predatory pricing by cigarette
21 dealers from states surrounding Illinois has contributed to
22 the destruction of the price structure in Illinois. Those
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1 dealers who are protected in their home states by cigarette
2 sales price laws similar to this Act have had an unfair
3 advantage over Illinois cigarette dealers. This Act is
4 enacted by the legislature to prevent the movement of the
5 cigarette distribution industry outside of Illinois, with the
6 loss of jobs attendant to such a move and to particularly
7 prevent not only the sale of untaxed cigarettes and the
8 evasion of State and local cigarette and sales taxes, but to
9 make sure the State of Illinois retains its level of tax
10 revenue from the sales taxes.
11 Section 10. Definitions. As used in this Act unless the
12 context otherwise requires:
13 (1) "Person" means and includes any individual, firm,
14 association, company, partnership, corporation, joint stock
15 company, club, agency, syndicate, the State of Illinois, and
16 any municipal corporation or other political subdivision of
17 this State, trust, receiver, trustee, fiduciary, or
18 conservator.
19 (2) "Director" means the Director of the Illinois
20 Department of Revenue.
21 (3) "Department of Revenue" means the Illinois
22 Department of Revenue.
23 (4) "Cigarette" means and includes any roll for smoking
24 made wholly or in part of tobacco, irrespective of size or
25 shape and whether or not the tobacco is flavored,
26 adulterated, or mixed with any other ingredient, the wrapper
27 or cover of which is made of paper or any other substance or
28 material, excepting tobacco.
29 (5) "Wholesaler" means any person who is licensed by the
30 State of Illinois to affix tax stamps to cigarettes and who
31 sells cigarettes at wholesale or distributes cigarettes to be
32 subsequently sold at retail, and includes any manufacturer,
33 distributor, jobber, sub-jobber as broker, agent, or other
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1 person, whether or not enumerated in this item (5), who is so
2 licensed and sells or distributes cigarettes. If a wholesaler
3 also sells or otherwise distributes cigarettes directly to
4 consumers, the wholesaler shall be considered a "retailer"
5 under this Act regarding any such sales or distributions.
6 (6) "Jobber" or "sub-jobber" means any person who sells
7 cigarettes at wholesale or who distributes cigarettes to be
8 subsequently sold at retail, but is not licensed by the State
9 of Illinois to affix tax stamps to cigarettes. If a jobber or
10 sub-jobber also sells or otherwise distributes cigarettes
11 directly to consumers, that jobber or sub-jobber shall be
12 considered a "retailer" under this Act regarding any such
13 sales or distributions.
14 (7) "Retailer" means and includes any person who sells
15 cigarettes in this State to a consumer or to any person for
16 any purpose other than resale, and the term includes a
17 wholesaler or jobber or sub-jobber who sells or distributes
18 cigarettes directly to a consumer.
19 (8) "Sale" or "sell" means any transfer for
20 consideration or gift.
21 (9) "Sell at wholesale", "sale at wholesale", or
22 "wholesale sale" means and includes any sale made in the
23 ordinary course of trade or usual conduct of the business of
24 a wholesaler, jobber, or sub-jobber to a retailer for the
25 purpose of resale.
26 (10) "Sell at retail", "sale at retail", or "retail
27 sale" means and includes any sale for consumption or use made
28 in the ordinary course of trade or usual conduct of the
29 seller's business.
30 (11) "Basic cost of cigarettes" means the lowest cost of
31 cigarettes available to the wholesaler, jobber, or
32 sub-jobber, as the case may be, within 7 days prior to the
33 date of sale, less (i) all discounts, except discounts
34 pertaining to Electronic Funds Transfer (EFT) and (ii) any
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1 taxes other than federal taxes.
2 (12) (a) "Cost to wholesaler, jobber, or sub-jobber for
3 wholesale sales" means the basic cost of the cigarettes
4 involved plus the cost of doing cigarette business by the
5 wholesaler, jobber, or sub-jobber. In determining the cost of
6 doing cigarette business by the wholesaler, jobber, or
7 sub-jobber, the cost of doing business shall first be
8 determined by applying the generally accepted accounting
9 practices employed by the wholesaler, jobber, or sub-jobber,
10 as the case may be, and includes labor costs, including
11 salaries of executives and officers, rent, depreciation,
12 selling costs, maintenance of equipment, delivery costs, all
13 types of licenses, taxes, insurance, and advertising.
14 (b) In the absence of proof of a lesser or higher cost
15 of doing cigarette business by the wholesaler making the
16 sale, the cost of doing cigarette business by the wholesaler
17 as to sales to jobbers and sub-jobbers shall be presumed to
18 be 1% of the basic cost of cigarettes and as to sales made to
19 retailers shall be presumed to be 3 1/2% of the basic cost of
20 cigarettes if cartage is provided by the wholesaler and 3% if
21 no cartage is so provided. In the absence of proof of a
22 lesser or higher cost of doing cigarette business by the
23 jobber or sub-jobber making the sales, the cost of doing
24 cigarette business by the jobber or sub-jobber shall be
25 presumed to be 2 1/2% of the basic cost of the cigarettes if
26 cartage is provided by the jobber or sub-jobber and 2% if no
27 cartage is provided.
28 Section 15. Sale at less than cost prohibited.
29 (a) It shall be unlawful for any wholesaler, jobber, or
30 sub-jobber to sell, at wholesale, cigarettes at less than
31 cost to the wholesaler, jobber, or sub-jobber, as the case
32 may be, as defined in Section 10 for the purpose of
33 destroying competition or substantially lessening
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1 competition.
2 (b) It shall be unlawful for any retailer:
3 (1) to induce or attempt to induce or to procure or
4 attempt to procure the purchase of cigarettes at a price
5 less than the cost to the wholesaler, jobber, or
6 sub-jobber; or
7 (2) to induce or attempt to induce or procure or
8 attempt to procure any rebate or commission of any kind
9 or nature whatsoever in connection with the purchase of
10 cigarettes.
11 (c) Sale of cigarettes by any wholesaler, jobber, or
12 sub-jobber at less than cost to that person shall be prima
13 facie evidence of intent to destroy or substantially lessen
14 competition.
15 Section 20. Combination of sales. In all sales involving
16 2 or more items, at least one of which items is cigarettes,
17 at a combined price, and in all sales involving the giving of
18 any gift or concession of any kind, whether it be coupons or
19 otherwise, the wholesaler's, jobber's, or sub-jobber's
20 combined selling price shall not be below the cost to the
21 wholesaler, jobber, or sub-jobber, respectively, of the total
22 of all articles, products, commodities, gifts, and
23 concessions included in the transactions, and for articles,
24 products, commodities, gifts, or concessions that are not
25 cigarettes, the basic cost thereof shall be determined in
26 like manner as provided in subsections (11) and (12) of
27 Section 10.
28 Section 25. Sales by wholesaler to any other wholesaler.
29 When one wholesaler sells cigarettes to any other wholesaler,
30 the seller shall not be required to include in his selling
31 price to the buyer, the "cost to the wholesaler", as provided
32 in Section 10, but the buyer wholesaler, upon resale to a
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1 jobber, sub-jobber, or a retailer, shall be subject to the
2 provisions of Section 10.
3 Section 30. Sales excluded from provisions of Section
4 15. The provisions of Section 15 shall not apply to a sale
5 at wholesale:
6 (1) if cigarettes are sold in a bona fide clearance sale
7 for the purpose of discontinuing trade in the cigarettes;
8 (2) if cigarettes are sold as imperfect or damaged;
9 (3) if cigarettes are sold upon the final liquidation of
10 a business; or
11 (4) if cigarettes are sold by any fiduciary or other
12 officer acting under the order or direction of any court.
13 Section 35. Transactions permitted to meet lawful
14 competition.
15 (a) Any wholesaler, jobber, or sub-jobber may sell
16 cigarettes to a regular customer at a price made in good
17 faith to meet the price of a competitor whether a wholesaler,
18 jobber, or sub-jobber selling to the same customer. The price
19 of cigarettes sold under the exceptions specified in Section
20 30 shall not be considered the price of a competitor and
21 shall not be used as a basis for establishing prices below
22 cost, nor shall the price established at a bankruptcy sale be
23 considered the price of a competitor within the purview of
24 this Section.
25 (b) In the absence of proof of the actual cost to the
26 competing wholesaler, jobber, or sub-jobber, as the case may
27 be, the cost may be presumed to be the lowest cost to the
28 wholesaler, jobber, or sub-jobber, as the case may be, as
29 provided in subsection (12)(b) of Section 10.
30 Section 40. Sales contract made in violation of this Act
31 void. Any contract, express or implied, made by any person
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1 in violation of any the provisions of this Act shall be void
2 and no recovery shall be had thereon.
3 Section 45. Actions for violations or threatened
4 violations; remedies; costs.
5 (a) The Department of Revenue shall have the prime
6 responsibility of enforcing the provisions of this Act and
7 shall adopt rules pertaining to this Act.
8 (b) Upon a first violation of any of the provisions of
9 this Act by a wholesaler, jobber, or sub-jobber, after due
10 notice and opportunity for a hearing, the Department of
11 Revenue may impose a civil fine not to exceed $15,000.
12 (c) Upon a second or subsequent violation of this Act
13 committed by a wholesaler, jobber, or sub-jobber, within 3
14 years following a prior finding of violation, after due
15 notice and opportunity for a hearing, the Department of
16 Revenue may impose a civil fine not to exceed $25,000.
17 (d) Any fines collected by the Department of Revenue for
18 violations of this Act shall be disbursed to the Prevention
19 of Tobacco Use by Minors Fund, which is created as a special
20 Fund in the State Treasury. Moneys in the Fund shall be
21 used, subject to appropriation, for the purpose of education
22 to prevent underage use of tobacco products.
23 (e) The Department of Revenue, or any person injured by
24 any violation of this Act, or who may suffer injury from any
25 threatened violation of this Act, may maintain an action in
26 any court of competent jurisdiction to prevent, restrain, or
27 enjoin the violation or threatened violation. If a violation
28 or threatened violation of this Act is established, the court
29 shall enjoin and restrain or otherwise prohibit the violation
30 or threatened violation. In addition, the court shall assess
31 in favor of the plaintiff and against the defendant the cost
32 of the suit, including reasonable attorney's fees. It shall
33 not be necessary that actual damages to the plaintiff be
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1 alleged or proved, but if alleged and proved, the plaintiff
2 in the action, in addition to injunctive relief, the costs of
3 the suit, and reasonable attorney's fees, shall be entitled
4 to recover from the defendant the actual damages sustained by
5 him or her.
6 (f) Any person injured by a violation of this Act may
7 maintain an action for damages and the costs of suit in any
8 court of general jurisdiction, and if successful, shall be
9 entitled to 3 times the amount of actual damages, plus costs
10 and reasonable attorney fees.
11 Section 50. Evidence admissible in determining cost to
12 wholesaler. In determining cost to the wholesaler, jobber, or
13 sub-jobber, the court shall receive and consider as bearing
14 on the proof of the cost, evidence tending to show that any
15 person complained against under any of the provisions of this
16 Act purchased the cigarettes involved in the complaint at a
17 fictitious price, or upon terms, or in a manner, or under
18 such invoices, as to conceal the true cost, discounts, or
19 terms of the purchase, and shall also receive and consider as
20 bearing on proof of the cost, evidence of the normal,
21 customary, and prevailing terms and discounts in connection
22 with other sales of a similar nature in the trade area or
23 state.
24 Section 55. Powers and duties of Department of Revenue.
25 (a) The Department of Revenue shall promulgate
26 administrative rules for the enforcement of this Act.
27 (b) All of the powers vested in the Director of the
28 Department of Revenue and Department of Revenue by the
29 provisions of the Cigarette Tax Act shall be available for
30 the enforcement of this Act.
31 Section 60. Application of Illinois Administrative
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1 Procedure Act. The Illinois Administrative Procedure Act is
2 hereby expressly adopted and shall apply to all
3 administrative rules and procedures of the Illinois
4 Department of Revenue under this Act.
5 Section 65. Nothing in this Act shall be construed to in
6 any way limit or restrict the ability of a retailer to price
7 cigarettes as that retailer chooses.
8 Section 95. The State Finance Act is amended by adding
9 Section 5.490 as follows:
10 (30 ILCS 105/5.490 new)
11 Sec. 5.490. The Prevention of Tobacco Use by Minors
12 Fund.".