Global brewing giant Heineken USA will pay a $1.25 million fine to the New York State Liquor Authority for violating state laws prohibiting gifts to retailers that carry their beer.
The authority found that Heineken USA,
the American division of the big Dutch brewing company
, illegally provided special patented draft systems to more than 800 bars and restaurants to help persuade those retailers to carry Heineken products.
The system, called
BrewLock,
only fits Heineken beer kegs or those from Heineken-affiliated brands, like the Italian beer Moretti. Each BrewLock is worth about $500.
Why state regulators came down so hard on Wegmans in liquor store case
"To (the State Liquor Authority), it's the equivalent of murder," liquor law expert says.
State liquor laws prohibit alcoholic beverage manufacturers or wholesalers (distributors) from giving away anything of value to “artificially incentivize sales,” according to a liquor authority news release.
In addition to the BrewLock giveaways, which occured from 2014 to 2015, the liquor authority accused Heineken of illegally using a third party to conceal a transaction with at least one retailer for a different Heineken draft beer system called Blade.
The SLA launched the investigation in April 2018, after learning of the BrewLock system giveaways from the federal Alcohol and Tobacco Tax and Trade Bureau (TTB). The
TTB itself fined Heineken $2.5 million
in April 2019 for the BrewLock violations, though the company did not admit breaking the law. That fine is the largest settlement in TTB history,
according to Brewbound.com.
On June 10, the New York SLA charged Heineken USA with 42 violations of the state Alcoholic Beverage Control (ABC) law, including thirty-two counts of providing illegal gifts and services and ten counts of failing to maintain adequate books and records.
Heineken entered a “no contest” offer to the liquor authority and agreed to pay the fine of $1.25 million. The offer was accepted Wednesday by the SLA board at its monthly meeting Albany.
Heineken has also discontinued its BrewLock program in New York state.
State alcohol laws define illegal gifts and services as “a broad array of potential inducements including money, credit extensions, services or free products that create an incentive for the retailer to purchase products predominately or exclusively from a specific supplier," the liquor authority said.
The intent of the laws is to “maintain a level playing field where small independent brewers can compete, ensuring that competition for beer taps are determined by price and quality and not influenced by offerings of free equipment and services,” according to a liquor authority statement.
“Whether you are small craft brewery or a major international company, you have to comply with the rules and laws of New York," State Liquor Authority Chairman Vincent Bradley said in a media release. "Our agency remains committed to rooting out anti-competitive practices that artificially restrict consumer choice and place small manufacturers at a disadvantage.”
Other recent fines imposed by the SLA for liquor law violations include:
-- In November 2018, the Rochester-based Wegmans supermarket chain and five affiliated liquor stores
paid $1.1 million in fines
. The SLA accused Wegmans of “effectively managing five liquor stores without a proper license, arranging sales to specified liquor stores without a license to traffic in wine, and for aiding and abetting gifts and services violations.”
-- In May 2018, The State Liquor Authority
fined beer maker Boston Beer Co. (Sam Adams) $975,000
for selling products without a required brand label registration. The SLA found that American Craft Brewery LLC., a subsidiary of Boston Beer Co., had sold 1.4 million cases of beer, hard cider and malt beverages in New York without the proper registration. The value of those sales was $24 million, the liquor authority said. Brands included Sam Adams beers, Twisted Tea malt beverages and Angry Orchard ciders.
-- In December 2017, Southern Glazer’s Wine & Spirits, the nation’s largest wine and liquor distributor, was
fined $3.5 million
-- the largest civil fine in SLA history -- for illegal gifts and services. Specifically Southern Glazer was charged with having its salespersons run up “large expenses on their corporate credit cards at favored retailer’s establishments, without receiving anything in return, to influence their purchasing decisions."
Boston Beer (Sam Adams) fined nearly $1 million for liquor law violations
A subsidiary of the Boston-based craft brewer failed to register labels for Sam Adams, Angry Orchard and Twisted tea brands, state says
Don Cazentre writes about craft beer, wine, spirits and beverages for
NYup.com
,
syracuse.com
and The Post-Standard. Reach him at
dcazentre@nyup.com
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