TTB Seeks Comment on Trade Practice Rules
In an Advance Notice of Proposed Rulemaking being published this morning in the Federal Register, Alcohol & Tobacco Tax & Trade Bureau seeks public comment on TTB's trade practice regulations related to the exclusive outlet, tied house, commercial bribery and consignment sales prohibitions of the Federal Alcohol Administration
In an Advance Notice of Proposed Rulemaking being published this morning in the Federal Register, Alcohol & Tobacco Tax & Trade Bureau seeks public comment on TTB's trade practice regulations related to the exclusive outlet, tied house, commercial bribery and consignment sales prohibitions of the Federal Alcohol Administration Act. The comments will be due in 120 days.
The proposed rulemaking is in response to President Biden's executive order on "Promoting Competition in the American Economy" which, among other things, sought to address "unlawful trade practices that hinder smaller and independent businesses or new entrants from distributing their products, patteerns of consolidation in production, distribution or retail markets and 'any unnecessary trade practice regulation of matters such as bottle sizes, permitting or label that may unnecessarily inhibit competition."
The request notes that TTB hasn't revised its trade practice regulations in more than 20 years and "recognizes that the regulations may not take into account current marketplace realities." Specific questions TTB is seeking guidance on include:
Update trade practice regulations
- How might TTB update the trade practice regulations to clarify and/or modernize the categories of conduct that may result in exclusion or threaten retailer independence?
- How might TTB update the trade practice regulations to clarify and/or modernize any exceptions to those categories?
- Is there exclusionary conduct the current trade practice
regulations overlook?
Trade practice regulations and competition
- How might TTB update the trade practice regulations to authorize more practices that would not result in exclusion or threaten retailer independence, including any limits on those practices?
- How might TTB update the trade practice regulations to focus more
on practices that have greater effect on the market
Digital marketplace.
- How might TTB update the trade practice regulations to take into account current marketplace realities, especially in light of the rise of digital marketing strategies (e.g., digital coupons, instant rebate
coupons, and virtual retail shelf space in digital retail storefronts where products may be purchased online)?
In addition, TTB expressed special interest in several practices. The first was category management. In the ANPR, TTB said it was aware that "industry members, acting as category managers or captains for retailers, are either making the buying decisions for retailers or strongly influencing the retailers’ buying decisions in a way that threatens retailer independence. How might TTB update the trade practice regulations to more thoroughly define and address category management activities to ensure that those activities do not lead to exclusion?
The second category was shelf plans, and TTB wondered if it should remove the exception which allows industry members to provide retailers with shelf plans and shelf schematics? It asked if providing shelf plans and schematics places retailer independence at risk. And the ANPR seeks to learn what additional
services, whether furnished in conjunction with providing shelf plans or
schematics or otherwise, place or have the potential to place a retailer’s
independence at risk?
The third practice TTB has zoned in on involves slotting fees, which have been identified as a major issue in the marketplace. Noting that TTB regulations don't specifically define slotting fees, TTB invited comments on whether its regulations should include a specific definition, and, specifically, the
extent to which such a definition should account for display space in the retail
premises.
TTB also seeks comments on whether the slotting fee definition should include free or subsidized equipment that is, by agreement or design, only able to display or dispense the furnishing industry member’s products.
The fourth practice TTB is seeking information about involves crowdfunding, including whether TTB should define a level of ownership interest that would not result in exclusion.
TTB also sought industry comment on inducements made through third party companies, on updating rules pertaining to specialty items and pos advertising materials, especially bev/al lists or menus, and extensions of credit.
The growing use of private labels has led some industry members to fear contracting to produce a private label product for a retailer may have the potential for violating exclusive outlet or tied house rules, and TTB sought input on how its regulations might address this question. Related to this is the use of an industry member's brand name as part of the name of the retail establishment.
Finally, the growing use of sponsorships at ballparks, concert venues and other events has raised concern, and TTB invited suggestions on clarifyig the regulations.