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91_HB1234eng HB1234 Engrossed LRB9103064LDmb 1 AN ACT to amend the Beer Industry Fair Dealing Act by 2 changing Sections 1.1, 2, 5, and 9. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 5. The Beer Industry Fair Dealing Act is amended 6 by changing Sections 1.1, 2, 5, and 9 as follows: 7 (815 ILCS 720/1.1) (from Ch. 43, par. 301.1) 8 Sec. 1.1. As used in this Act: 9 (1) "Beer" means a beverage obtained by the alcoholic 10 fermentation of an infusion or concoction of barley, or other 11 grain, malt, and hops in water, and includes, among other 12 things, beer, ale, stout, lager beer, porter and the like. 13 For purposes of this Act only, the term "beer" shall also 14 include malt beverage products containing less than one-half 15 of 1% of alcohol by volume and marketed for adult consumption 16 as an alternative beverage to beer. 17 (2) "Agreement" means any contract, agreement,or18 arrangement, operating standards, or amendments to a 19 contract, agreement, arrangement, or operating standards, the 20 effect of which is to substantially change or modify the 21 existing contract, agreement, arrangement, or operating 22 standards, whether expressed or implied, whether oral or 23 written, for a definite or indefinite period between a brewer 24 and a wholesaler pursuant to which a wholesaler has been 25 granted the right to purchase, resell, and distribute as 26 wholesaler or master distributor any brand or brands of beer 27 offered by a brewer. The agreement between a brewer and 28 wholesaler shall not be considered a franchise relationship. 29 (3) "Wholesaler" or "beer wholesaler" means any person, 30 other than a manufacturer licensed under The Liquor Control 31 Act of 1934, who is engaged in this State in purchasing, HB1234 Engrossed -2- LRB9103064LDmb 1 storing, possessing or warehousing any alcoholic liquors for 2 resale or reselling at wholesale, whether within or without 3 this State. 4 (4) "Brewer" means a person who is engaged in the 5 manufacture of beer, a master distributor as defined in this 6 Section, a successor brewer as defined in this Section, a 7 non-resident dealer under the provisions of the Liquor 8 Control Act of 1934, a foreign importer under the provisions 9 of the Liquor Control Act of 1934, or a person who owns or 10 controls the trademark, brand, or name of beer. 11 (5) "Master Distributor" means a person who, in addition 12 to being a wholesaler, acts in the same or similar capacity 13 as a brewer or outside seller of one or more brands of beer 14 to other wholesalers on a regular basis in the normal course 15 of business. 16 (6) "Successor Brewer" means any person who in any way 17 obtains the distribution rights that a brewer or master 18 distributor once had to manufacture or distribute a brand or 19 brands of beer whether by merger, purchase of corporate 20 shares, purchase of assets, or any other arrangement. 21 (7) "Person" means a natural person, partnership, 22 corporation, trust, agency, or other form of business 23 enterprise. Person also includes heirs, assigns, personal 24 representatives and guardians. 25 (8) "Territory" or "sales territory" means the 26 geographic area of primary sales responsibility designated by 27 an agreement between a wholesaler and brewer for any brand or 28 brands of the brewer. 29 (9) "Good cause" exists if the wholesaler or affected 30 party has failed to comply with essential and reasonable 31 requirements imposed upon the wholesaler or affected party by 32 the agreement. The requirements may not be discriminating 33 either by their terms or in the methods of their enforcement 34 as compared with requirements imposed on other similarly HB1234 Engrossed -3- LRB9103064LDmb 1 situated wholesalers by the brewer. The requirements may not 2 be inconsistent with this Act or in violation of any law or 3 regulation. 4 (10) "Good faith" means honesty in fact and the 5 observance of reasonable commercial standards of fair dealing 6 in the trade as defined and interpreted under Section 2-103 7 of the Uniform Commercial Code. 8 (11) "Reasonable standards and qualifications" means 9 those criteria applied by the brewer to similarly situated 10 wholesalers during a period of 24 months before the proposed 11 change in manager or successor manager of the wholesaler's 12 business. 13 (12) "Affected party" means a wholesaler, brewer, master 14 distributor, successor brewer, or any person that is a party 15 to an agreement. 16 (13) "Signs" means signs described in Section 6-6 of the 17 Liquor Control Act of 1934. 18 (14) "Advertising materials" means advertising materials 19 described in Section 6-6 of the Liquor Control Act of 1934. 20 (Source: P.A. 89-83, eff. 6-30-95; 90-373, eff. 8-14-97.) 21 (815 ILCS 720/2) (from Ch. 43, par. 302) 22 Sec. 2. Purposes. The purposes and scope of this Act 23 are: 24 (A) This Act is promulgated pursuant to authority of the 25 State under the provisions of the Twenty-First Amendment to 26 the United States Constitution to promote the public's 27 interest in fair, efficient and competitive distribution of 28 malt beverage products by regulation and encouragement of 29 brewer and wholesaler vendors to conduct their business 30 relations toward these ends by: 31 (i) assuring the beer wholesaler is free to manage its 32 business enterprise, including the wholesaler's right to 33 independently establish its selling prices; and HB1234 Engrossed -4- LRB9103064LDmb 1 (ii) assuring the brewer and the public of service from 2 wholesalers who will devote reasonable efforts and resources 3 to sales and distribution of all the brewer's products, which 4 wholesaler has been granted the right to sell and distribute 5 and maintain satisfactory sales levels. 6 (B) This Act shall be incorporated into and shall be 7 deemed a part of every agreement between brewers and 8 wholesalers and shall govern all relations between brewers 9 and their wholesalers to the full extent consistent with the 10 constitutions and laws of this State and the United States. 11 (Source: P.A. 82-946.) 12 (815 ILCS 720/5) (from Ch. 43, par. 305) 13 Sec. 5. Prohibited conduct. No brewer shall: 14 (1) Induce or coerce, or attempt to induce or 15 coerce, any wholesaler to engage in any illegal act or 16 course of conduct either by threatening to amend, modify, 17 cancel, terminate, or refuse to renew any agreement 18 existing between the brewer and the wholesaler, or by any 19 other means. 20 (2) Require a wholesaler to assent to any 21 unreasonable requirement, condition, understanding or 22 term or an agreement prohibiting a wholesaler from 23 selling the product of any other brewer or brewers. 24 (3) Directly or indirectly fix or maintain the 25 price at which a wholesaler may resell beer. 26 (4) Fail to provide to each wholesaler of its 27 brands a written contract which embodies the brewer's 28 agreement with its wholesalers and conforms to the 29 provisions of this Act. 30 (5) Require any wholesaler to accept delivery of 31 any beer, signs, advertising materials, or any other item 32 or commodity which has not been ordered by the 33 wholesaler, or require any wholesaler to accept a common HB1234 Engrossed -5- LRB9103064LDmb 1 carrier for delivery of beer into this State unless the 2 wholesaler consents to the common carrier. In the event 3 a brewer adopts a uniform practice of delivering beer 4 into this State to the premises of all licensed 5 wholesalers, the brewer may select the common carrier in 6 this State. 7 (6) Require a wholesaler without the wholesaler's 8 approval to participate in an arrangement for the payment 9 or crediting by an electronic fund transfer transaction 10 for any item or commodity other than beer or to access a 11 wholesaler's account for any item or commodity other than 12 beer. 13 (7) Require a wholesaler to assent to any 14 requirement prohibiting the wholesaler from disposing, 15 after notice to the brewer, of a product which has been 16 deemed salvageable by a local or State health authority. 17 Nothing herein shall prohibit the brewer from having the 18 first right to purchase the salvageable product from the 19 wholesaler at a price not to exceed the original cost of 20 the product or to subsequently repurchase the product 21 from the insurance company or salvage company. 22 (8) Refuse to approve or require a wholesaler to 23 terminate a manager or successor manager without good 24 cause. A brewer has good cause only if the person 25 designated as manager or successor manager by the 26 wholesaler fails to meet reasonable standards and 27 qualifications. 28 (9) Present an agreement to a wholesaler that 29 attempts to waive compliance with any provision of this 30 Act or that requires the wholesaler to waive compliance 31 with any provision of this Act. No brewer shall induce or 32 coerce, or attempt to induce or coerce, any wholesaler to 33 assent to any agreement, amendment, renewal, or 34 replacement agreement that contains any provision that HB1234 Engrossed -6- LRB9103064LDmb 1 does not comply with this Act and the laws of this State. 2 3 (10) Terminate or attempt to terminate an agreement 4 on the basis that the wholesaler refuses to purchase 5 signs or advertising materials or any quantity or types 6 thereof. 7 (11) Discriminate against a wholesaler who has 8 entered into a contract relative to signs or advertising 9 materials by not making signs or advertising materials or 10 any quantity or types thereof available to the wholesaler 11 when the brewer makes available such signs or advertising 12 materials to other similarly situated wholesalers in this 13 State. 14 (12) Present an agreement requiring the wholesaler 15 to arbitrate all disputes without offering the wholesaler 16 in writing the opportunity to reject arbitration and 17 elect to resolve all disputes by maintaining a civil suit 18 in accordance with this Act. 19 No brewer who, pursuant to an agreement with a wholesaler 20 which does not violate antitrust laws, has designated a sales 21 territory for which the wholesaler is primarily responsible 22 or in which the wholesaler is required to concentrate its 23 efforts, shall enter into an agreement with any other 24 wholesaler for the purpose of establishing an additional 25 wholesaler for the brewer's brand or brands in all or part of 26 the same territory. 27 No wholesaler who, pursuant to an agreement is granted a 28 sales territory for which it shall be primarily responsible 29 or in which it is required to concentrate its efforts, shall 30 make any sale or delivery of beer to any retail licensee 31 whose place of business is not within the territory granted 32 to the wholesaler. 33 (Source: P.A. 89-83, eff. 6-30-95; 90-373, eff. 8-14-97.) HB1234 Engrossed -7- LRB9103064LDmb 1 (815 ILCS 720/9) (from Ch. 43, par. 309) 2 Sec. 9. Judicial and other remedies. 3 (1) If the brewer or wholesaler who is a party to an 4 agreement pursuant to this Act fails to comply with this Act 5 or otherwise engages in conduct prohibited under this Act, 6 the affected party may maintain a civil suit in court if the 7 cause of action directly relates to or stems from the 8 relationship of the individual parties under the agreement, 9 provided that any such suit shall be filed in a State or 10 federal court of competent jurisdiction located in Illinois. 11 In any legal action challenging any cancellation, 12 termination, or failure to renew, the brewer shall have the 13 burden of proof to show that its action was based upon good 14 cause, provided, however, that the wholesaler shall retain 15 the burden of proof in all other respects. 16 (2) A brewer or wholesaler may bring an action for 17 declaratory judgment for determination of any controversy 18 arising under this Act or out of the brewer and wholesaler 19 relationship. 20 (3) Upon proper application to the court, a brewer or 21 wholesaler may obtain injunctive relief against any violation 22 of this Act. Any termination or cancellation or attempted 23 termination or cancellation of an agreement by a brewer or 24 wholesaler in violation of this Act shall be presumed to 25 result in irreparable harm to the affected party, and the 26 affected party shall be presumed to have no adequate remedy 27 at law. In the event of such a termination or cancellation, 28 proof of irreparable harm or the inadequacy of a remedy at 29 law shall not be required to establish a right to preliminary 30 or permanent injunctive relief; however, the party seeking an 31 injunction shall not be relieved of establishing such other 32 standards as required by law. 33 (4) In any action under subsection (1) the court may 34 grant such relief as the court determines is necessary or HB1234 Engrossed -8- LRB9103064LDmb 1 appropriate considering the purposes of this Act. 2 (5) The prevailing party in any action under subsection 3 (1) shall be entitled to (i) actual damages, (ii) all court 4 or arbitration costs, and (iii) attorneys' fees at the 5 court's discretion. 6 (6) With respect to any dispute arising under this Act 7 or out of the relationship between brewer and wholesaler, the 8 wholesaler and the brewer each has the absolute right before 9 it has agreed to arbitrate a particular dispute to refuse to 10 arbitrate that particular dispute. Arbitration shall be 11 conducted in accordance with the Commercial Arbitration Rules 12 of the American Arbitration Association and the laws of this 13 State, and judgment upon the award rendered by the arbitrator 14 may be entered in any court having jurisdiction. A brewer 15 may not, as a condition of entering into or renewing an 16 agreement, require the wholesaler to agree to arbitration 17 instead of judicial remedies. 18 (7) If there is a finding by an arbitrator or a court in 19 a proceeding under this Section or under subsection (1.5) or 20 (2) of Section 7 that a party has not acted in good faith, an 21 appropriate penalty shall be assessed by the arbitrator or 22 the court against that party and, in addition, that party 23 shall also be ordered to pay all court or arbitration costs 24 and reasonable legal fees incurred by the other party in the 25 proceeding. 26 (Source: P.A. 89-716, eff. 2-21-97; 90-91, eff. 7-11-97; 27 90-655, eff. 7-30-98.) 28 Section 99. Effective date. This Act takes effect upon 29 becoming law.