Calif. ABC Warns Suppliers on 'Pay-to-Play' at Venues, Including FIFA

The California Department of Alcoholic Beverage Control has reminded supplier licensees that California's tied-house law prohibits suppliers from paying retailers to advertise the suppliers products on the retail premises. It makes no difference whether the retail holds a permanent license or a temporary license.

To be sure, there are many statutory exceptions that expressly allow suppliers to contract with retail licensees for ad space/time or for paid sponsorships of the venue. But even in those circumstances, a retailer cannot condition its purchases on the supplier buying ad space, time or sponsorships.

Strike, Kerr & Johns (SKJ), a California law firms specializing in alcohol law, noted "the Advisory specifically referenced special events like the FIFA World Cup and the Olympics as not being exempt from the prohibitions on “pay-to-play” activity, even if held at venues with statutory advertising exceptions."

In its bulletin to its clients, SKJ noted the department is increasingly investigating and enforcing "pay-to-play" activities, particularly where there are complaints the statutory exceptions are being used improperly.

The department also reminded suppliers that even if they use a third-party marketing agency, they are responsible for any violation of California's tied-house statute.