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91_HB1061sam001
LRB9105378LDmbam01
1 AMENDMENT TO HOUSE BILL 1061
2 AMENDMENT NO. . Amend House Bill 1061 by replacing
3 the title with the following:
4 "AN ACT concerning soft drink beverage distribution.";
5 and
6 by replacing everything after the enacting clause with the
7 following:
8 "Section 1. Short title. This Act may be cited as the
9 Soft Drink Industry Fair Dealing Act.
10 Section 5. Definitions. As used in this Act:
11 "Distribution agreement" means any contract, appointment,
12 agreement, course of dealing, or arrangement, express or
13 implied, whether oral or written, for a definite or
14 indefinite period, between a supplier and a distributor
15 pursuant to which the distributor has been granted the right
16 to (i) directly or through a cooperative or association of
17 which the distributor is a member, bottle or can one or more
18 soft drink beverages or process soft drink beverage
19 concentrate into beverage syrup, and (ii) sell, distribute,
20 or deliver such soft drink beverages or soft drink beverage
21 syrup under trademarks owned or licensed by the supplier.
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1 "Distributor" means a person in this State who (i)
2 directly or through a cooperative or association of which the
3 person is a member, bottles or cans one or more soft drink
4 beverage or processes soft drink beverage concentrate into
5 beverage syrup, and (ii) sells, distributes, or delivers such
6 soft drink beverages or soft drink beverage syrup under
7 trademarks owned or licensed by a supplier.
8 "Distributorship" means a business relationship between a
9 supplier and a distributor established pursuant to a
10 distribution agreement. Except as otherwise expressly
11 provided in this Act, the term "distributorship" does not
12 include a partnership, joint venture, corporation, limited
13 liability company, or other entity owned in whole or in part
14 by a supplier.
15 "Good cause" means the material failure of a distributor
16 to comply with essential and reasonable requirements imposed
17 upon the distributor by a distribution agreement or bad faith
18 in the performance of a distribution agreement. The
19 requirements may not be discriminatory either by their terms
20 or in the methods or effects of enforcement as compared with
21 requirements imposed upon other similarly situated Illinois
22 distributors. The requirements may not be inconsistent with
23 this Act or in violation of any law or regulation. The
24 failure of a distributor to assent to any amendment,
25 modification, or change in the terms of a distribution
26 agreement that impairs, restricts, or eliminates, in whole or
27 in part, the distribution or delivery rights of a distributor
28 under the distribution agreement shall not constitute good
29 cause.
30 "Good faith" means honesty in fact and the observation of
31 reasonable commercial standards for fair dealing in trade.
32 "Person" means a natural person, partnership, joint
33 venture, corporation, limited liability company, or other
34 entity and includes heirs, assigns, successors, personal
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1 representatives, and guardians.
2 "Soft drink" means a non-alcoholic, carbonated beverage
3 made from a concentrate, syrup, or other beverage base.
4 "Soft drink products" means ready-to-use soft drinks,
5 whether in bottles, cans, or other containers and soft drink
6 beverage syrup for use in servicing fountain equipment and
7 cup vending machines dispensing soft drinks.
8 "Supplier" means a person engaged in the manufacture or
9 marketing of soft drink beverage concentrate, syrup, or other
10 soft drink beverage base for use in the preparation of soft
11 drink products sold under trademarks owned or licensed by
12 such person.
13 Section 10. Legislative declarations; construction;
14 variation by contract.
15 (a) The General Assembly makes the following findings
16 and declarations:
17 (1) Distributors of soft drink products in the
18 State of Illinois have been and are required to make
19 substantial capital investments in plant, property, and
20 equipment in order to fulfill their obligations under
21 distribution agreements. Distributors must rely upon the
22 continuing right to sell and distribute soft drink
23 products to recover their investments and to obtain a
24 reasonable return on those investments.
25 (2) Distributorship relationships in the State of
26 Illinois vitally affect the general economy of the State
27 and the public's interest in the fair, efficient, and
28 competitive distribution of soft drink products.
29 (b) The purposes of this Act are to promote the public's
30 interest in the fair, efficient, and competitive distribution
31 of soft drink products by regulation and by the encouragement
32 of suppliers and distributors of soft drink products to
33 conduct their business relations toward these ends by:
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1 (1) protecting distributors against unfair
2 treatment by suppliers in the negotiation, revision,
3 renewal, and cancellation of distributorships and
4 distribution practices;
5 (2) assuring that distributors are free to manage
6 their business enterprises;
7 (3) assuring suppliers and the public of continuing
8 service from distributors able to devote adequate efforts
9 and resources to the processing, bottling, canning,
10 distribution, and delivery of soft drink products as to
11 which they have been granted a distributorship; and
12 (4) providing distributors with rights and remedies
13 in addition to those existing by contract or at common
14 law.
15 This Act shall be liberally construed and applied to
16 promote its underlying purposes.
17 (c) Any contract or agreement purporting to waive or
18 vary the provisions of this Act, or purporting to preclude
19 the application of this Act to any distributorship subject to
20 this Act is void and unenforceable to that extent.
21 (d) This Act provides distributors with rights and
22 remedies in addition to those existing by contract or common
23 law and reaffirms rights and remedies provided by contract or
24 common law.
25 (e) In accordance with Section 1.31 of the Statute on
26 Statutes, the provisions of this Act are severable. If any
27 provision of this Act, or the application of any provision of
28 this Act to any person or circumstance, is held invalid, such
29 invalidity shall not affect other provisions or applications
30 of this Act which can be given effect without the invalid
31 provision or application, and the application of this Act to
32 persons or circumstances other than those as to which it is
33 held invalid shall not be affected thereby.
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1 Section 15. Cancellation and alteration of
2 distributorships.
3 (a) No supplier, directly or through any officer, agent,
4 employee, or representative, shall:
5 (1) cancel, fail to renew, or otherwise terminate a
6 distribution agreement without good cause to do so;
7 (2) unilaterally impose any amendment,
8 modification, or change in the terms of a distribution
9 agreement;
10 (3) fail to exercise good faith in the negotiation
11 of any amendment, modification, or change in the terms of
12 a distribution agreement, engage in retaliatory conduct
13 against a distributor for the exercise of a legal right,
14 or otherwise fail to exercise good faith in its dealings
15 with a distributor;
16 (4) discriminate in pricing, fees, charges or other
17 terms of the distributorship against any distributor that
18 withholds its assent to any amendment, modification, or
19 change in the terms of a distribution agreement;
20 (5) restrict or inhibit, directly or indirectly,
21 the right of free association among distributors for any
22 lawful purpose;
23 (6) fail, without good cause, to offer a
24 distributor the right, within its geographic territory,
25 to (i) directly or through a cooperative or association
26 of which the distributor is a member, bottle or can any
27 new soft drink beverages introduced by the supplier and
28 process any new soft drink beverage concentrate into
29 beverage syrup, and (ii) sell, distribute, and deliver
30 such soft drink beverages or soft drink beverage syrup
31 under trademarks owned or licensed by the supplier or
32 offer a distributor such right on terms and conditions
33 less favorable than such right is offered to any other
34 distributor of the supplier, including any distributor
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1 owned in whole or in part by the supplier.
2 (b) No supplier who, pursuant to a distribution
3 agreement, has granted a person the exclusive right in a
4 generally defined geographic area to (i) directly or through
5 a cooperative or association of which the person is a member,
6 bottle or can one or more soft drink beverages, or process
7 soft drink beverage concentrate into beverage syrup, and (ii)
8 sell, distribute, or deliver such soft drink beverages or
9 soft drink beverage syrup under trademarks owned or licensed
10 by the supplier, shall, directly or through any officer,
11 agent, employee, or representative, enter into an agreement
12 authorizing, permitting, contemplating, or providing for the
13 exercise of any of such rights in the same geographic area by
14 any other person.
15 Section 20. Notice of cancellation.
16 (a) Except as hereinafter provided in subsection (c), no
17 supplier may cancel, fail to renew, or otherwise terminate a
18 distribution agreement unless the supplier furnishes prior
19 notification to the affected party in accordance with
20 subsection (b).
21 (b) The notification required by subsection (a) of this
22 Section shall contain (i) a statement of the supplier's
23 intention to cancel, fail to renew, or otherwise terminate
24 the distribution agreement, (ii) a complete statement of the
25 reasons therefor, including all data and documentation
26 necessary to fully apprise the distributor of the reasons for
27 the action, and (iii) the date on which the action is
28 intended to take effect. The notification shall be in
29 writing and sent to the affected distributor by certified
30 mail not less than 90 days before the date on which the
31 supplier intends to cancel, fail to renew, or otherwise
32 terminate the distribution agreement, and shall provide the
33 distributor a reasonable period of time, in no event less
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1 than 60 days from the date of delivery or posting of the
2 notice, within which to cure any claimed deficiency. If the
3 reason for cancellation, nonrenewal, or other termination is
4 nonpayment of sums due under the distributorship, the
5 notification shall be sent not less than 30 days before the
6 date on which the supplier intends to cancel, fail to renew,
7 or otherwise terminate the distribution agreement, and the
8 distributor shall have 30 days from the date of delivery or
9 posting of the notice within which to cure the default. If
10 the deficiency is cured within the applicable period, the
11 notice shall be void.
12 (c) The notice requirements of this Section shall not
13 apply if the reason for cancellation, failure to renew, or
14 other termination of a distributorship agreement is:
15 (1) an assignment for the benefit of the
16 distributor's creditors or similar disposition of
17 substantially all of the assets of the distributor's
18 business;
19 (2) the insolvency of the distributor or the
20 institution of proceedings in bankruptcy by or against
21 the distributor; or
22 (3) the dissolution or liquidation of the
23 distributor.
24 Section 25. Transfer of business assets and stock. No
25 supplier, directly or through any officer, agent, employee or
26 representative, shall:
27 (a) unreasonably withhold or delay its consent, if
28 requested by a distributor, to any assignment, sale,
29 transfer, or other disposition of all or any portion of (i) a
30 distributor's business, assets, or stock, or of the
31 beneficial ownership or control of a distributor, or (ii) the
32 stock, beneficial ownership, or control of any other entity
33 owning or controlling a distributor;
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1 (b) upon the death of a person owning or controlling a
2 distributor, unreasonably deny approval of a transfer of
3 ownership or control of the distributorship to a surviving
4 spouse or adult child of such person;
5 (c) upon the death of one of the partners of a
6 partnership operating the business of a distributor, deny the
7 surviving partner or partners of such partnership the right
8 to become a successor-in-interest to the distribution
9 agreement between the supplier and such partnership;
10 (d) unreasonably withhold or delay its consent, if
11 requested by a distributor, to any assignment, sale, or
12 transfer to the distributor of all or any portion of the
13 business, assets, or stock of any other person who has been
14 granted the right to (i) directly or through a cooperative or
15 association of which the person is a member, bottle or can
16 one or more soft drink beverages or process soft drink
17 beverage concentrate into beverage syrup, and (ii) sell,
18 distribute, or deliver soft drink beverages or soft drink
19 beverage syrup under trademarks owned or licensed by the
20 supplier, where the distributor and such other person have
21 freely negotiated such an assignment, sale, or transfer.
22 Section 30. Reasonable compensation.
23 (a) Any supplier that (i) cancels, fails to renew, or
24 otherwise terminates any distribution agreement, or (ii)
25 unlawfully denies approval of or unreasonably withholds
26 consent to any assignment, transfer, or sale of a
27 distributor's business, assets, stock, or other ownership
28 interest in a distributor, shall (i) pay the distributor the
29 fair market value of that portion of the distributor's
30 business that the supplier has cancelled, failed to renew, or
31 otherwise terminated, or (ii) pay the distributor or other
32 aggrieved person the fair market value of that portion of the
33 business, assets, stock, or other ownership interest sought
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1 to be assigned, transferred, or sold. Fair market value shall
2 include, but shall not be limited to, the value of the
3 goodwill associated with the business, assets, stock, or
4 other ownership interest valued hereunder, and such fair
5 market value shall be determined without regard to any
6 marketability, minority interest, or other similar discount
7 or reduction.
8 (b) If a supplier and a distributor or other aggrieved
9 person are unable to agree on the reasonable compensation to
10 be paid under subsection (a), any such party may maintain a
11 civil suit as provided in Section 35 of this Act or the
12 matter may, by mutual agreement of the parties, be submitted
13 to arbitration or mediation. Unless the parties otherwise
14 agree, the costs of arbitration shall be shared equally by
15 the parties.
16 (c) No distributorship agreement may require the
17 distributor to pay more than half the costs of arbitration or
18 mediation or require arbitration or mediation to be conducted
19 outside this State.
20 Section 35. Judicial remedies.
21 (a) It shall be an affirmative defense in an action
22 between the parties to a distributorship agreement that good
23 cause existed for a supplier to cancel, fail to renew, or
24 otherwise terminate the distributorship agreement at issue.
25 (b) If a supplier engages in any of the practices
26 prohibited by Section 15 of this Act or violates any of the
27 provisions of Sections 20, 25, or 30 of this Act, any
28 aggrieved distributor or other aggrieved person may bring an
29 action against the supplier for damages sustained by the
30 distributor as a consequence thereof, together with the
31 actual costs and expenses of the action, including reasonable
32 attorney's fees. The aggrieved distributor or other
33 aggrieved person also may be granted injunctive relief,
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1 including injunctive relief against an unlawful termination,
2 cancellation, nonrenewal, or other termination of a
3 distribution agreement. The remedies provided in this
4 subsection (b) are cumulative with all other remedies
5 available to an aggrieved distributor or other aggrieved
6 person, including but not limited to the remedies provided
7 for in subsections (c), (d) and (e) of this Section.
8 (c) Upon proper application to the court, a supplier,
9 distributor, or other aggrieved person may bring an action to
10 determine reasonable compensation under Section 30 of this
11 Act.
12 (d) A supplier, distributor, or other aggrieved person
13 may bring an action for a declaratory judgment to determine
14 any controversy arising under this Act or out of the
15 distributorship relationship.
16 (e) If, in any action brought pursuant to this Act, a
17 finding is made that a party has not acted in good faith with
18 respect to any other party to a distribution agreement, an
19 appropriate penalty shall be assessed against that party and,
20 in addition, that party shall also be ordered to pay the
21 actual costs and expenses of the action, including reasonable
22 attorney's fees incurred by the other party.
23 (f) Any action brought pursuant to this Act shall be
24 brought in a court of this State or in a federal court in
25 this State vested with jurisdiction over the controversy.
26 Venue in any such action shall be in accordance with the Code
27 of Civil Procedure or Title 28 of the U.S. Code, as the case
28 may be, provided that in any action brought in a court of
29 this State, venue also shall exist in any county in which the
30 distributorship is located.
31 (g) Nothing in this Act shall (i) prohibit the parties
32 to any dispute from agreeing to arbitrate the dispute or to
33 submit the dispute to mediation or (ii) prohibit the
34 enforcement of any arbitration or mediation agreement in
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1 accordance with applicable Illinois law. In any such
2 arbitration or mediation, the definitions and substantive
3 provisions of this Act shall apply and the arbitrator or
4 mediator may afford the remedies provided for by this Act.
5 Section 40. Application of this Act. This Act shall
6 govern all relations between suppliers and distributors to
7 the fullest extent consistent with the constitutions of this
8 State and of the United States. All provisions of this Act
9 which are declarative of or clarify existing law, including
10 the provisions of Section 15(a)(3) of this Act, apply to all
11 agreements between a supplier and a distributor whether those
12 agreements were entered into before or after the effective
13 date of this Act. In addition, this Act shall, to the
14 fullest extent permitted by law, apply (i) to conduct
15 occurring after the effective date of this Act, whether or
16 not such conduct relates to a distribution agreement entered
17 into before the effective date of this Act, and (ii) to
18 distribution agreements entered into or amended after the
19 effective date of this Act, including any renewal of a
20 distribution agreement in existence on or before the
21 effective date of this Act. Renewal of a distribution
22 agreement with a designated term or duration shall mean (i)
23 the establishment of a new term or duration, (ii) an
24 extension of the distribution agreement on any other basis,
25 or (iii) the shipment of soft drink concentrate or syrup to
26 the distributor after the expiration of the designated term
27 or duration. Renewal of a distribution agreement that
28 provides for a month to month, year to year, or other
29 periodic term or duration, shall mean (i) the continuation of
30 the distributorship into the next month, year, or other
31 period commencing after the effective date of this Act, (ii)
32 an extension of the distribution agreement on any other
33 basis, or (iii) the shipment of soft drink concentrate or
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1 syrup to a distributor after the expiration of the month,
2 year, or other period of the distribution agreement. Renewal
3 of any distribution agreement that does not have a designated
4 term or duration, or that is terminable at will or upon
5 notice, shall mean the shipment of soft drink concentrate or
6 syrup to a distributor after the effective date of this Act.
7 Section 99. Effective date. This Act takes effect upon
8 becoming law.".