BILL ANALYSIS Ó
AB 1303
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Date of Hearing: April 8, 2015
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Adam Gray, Chair
AB 1303
(Gray) - As Introduced February 27, 2015
SUBJECT: Alcoholic beverages: tied-house restrictions
SUMMARY: Adds clarity to an existing tied-house exception in
the Alcoholic Beverage Control Act (ABC Act) pertaining to
market research by certain licensees and the purchase of
off-sale retail data by also including a "distilled spirits
wholesaler" in the provision prohibiting a licensed retailer
from being obligated to purchase or sell the alcoholic beverages
of the licensee conducting the market research.
EXISTING LAW:
1) Establishes the Department of Alcoholic Beverage Control
(ABC) and grants it exclusive authority to administer the
provisions of the ABC Act in accordance with laws enacted by the
Legislature. This involves licensing individuals and businesses
associated with the manufacture, importation and sale of
alcoholic beverages in this state and the collection of license
fees or occupation taxes for this purpose.
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2) Prohibits specified holders of alcoholic beverage licenses
from having specified relationships with an on-sale alcoholic
beverage licensee, with limited exceptions.
3) Permits a manufacturer, winegrower, rectifier, distiller,
distilled spirits wholesaler, or any agent of those licenses, to
conduct market research and, in connection with that research,
to purchase from licensed off-sale retailers data, regarding
purchases and sales of alcoholic beverage products, at the
customary rates that those retailers sell similar data for
non-alcoholic beverage products, provided that no licensed
retailer shall be obligated to purchase or sell the alcoholic
beverages of the manufacturer, winegrower, rectifier, or
distiller.
4) Existing law, known as the "Tied-house law," separates the
alcoholic beverage industry into three component parts, or
tiers, of manufacturer (including breweries, wineries and
distilleries), wholesaler, and retailer (both on-sale and
off-sale).
FISCAL EFFECT: Unknown
COMMENTS:
Background : Tied house refers to a practice in this country
prior to Prohibition and still occurring in England today where
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a bar or public house, from whence comes the "house" of tied
house, is tied to the products of a particular manufacturer,
either because the manufacturer owns the house, or the house is
contractually obligated to carry only a particular
manufacturer's products.
The original policy rationale for this body of law was to: (a)
promote the state's interest in an orderly market; (b) prohibit
the vertical integration and dominance by a single producer in
the marketplace; (c) prohibit commercial bribery and protect the
public from predatory marketing practices; and, (d) discourage
and/or prevent the intemperate use of alcoholic beverages.
Generally, other than exceptions granted by the Legislature, the
holder of one type of license is not permitted to do business as
another type of licensee within the "three-tier" system.
Existing law provides for numerous tied-house exceptions to the
general prohibition including one which allows certain licensees
to conduct market research and, in connection with that
research, to purchase marketing data from off-sale licensed
retailers provided that no licensed retailer is obligated to
purchase or sell the alcoholic beverages of the purchasing
licensee.
Purpose of the bill : As noted above, existing law generally
prohibits the giving of something of value from certain
licensees to another group of licensees. An exception has been
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made to the general prohibition to allow certain licensees
(manufacturers, winegrowers, rectifiers, distillers, and
distilled spirits wholesalers) to conduct market research and,
in connection with that research, to purchase marketing data
from off-sale licensed retailers provided that no licensed
retailer is obligated to purchase or sell the alcoholic
beverages of the purchasing licensee. A licensed retailer is
also prohibited from requiring the exempted group of licensed
purchasers of marketing data to conduct market research as a
condition for selling alcoholic beverages to that licensed
retailer.
Currently, a distilled spirits wholesaler is one of the
licensees exempt from the general prohibition, but is not one of
the entities prohibited from obligating the licensed retailer to
purchase or sell the alcoholic beverages of the licensee
conducting the market research. This bill would correct this
oversight by including a "distilled spirits wholesaler" in the
provision prohibiting a licensed retailer from being obligated
to purchase or sell alcoholic beverages of the licensee
conducting the research.
Prior legislation : AB 1429 (Assembly Governmental Organization
Committee), Chapter 567, Statutes of 2001. Among other things,
authorized various licensed entities to conduct market research
and, in connection with that research, to purchase from licensed
on-sale retailers data, regarding purchases and sales of
alcoholic beverage products, at the customary rates that those
retailers sell similar data for nonalcoholic beverage products
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REGISTERED SUPPORT / OPPOSITION:
Support
None on file
Opposition
None on file
Analysis Prepared by:Eric Johnson / G.O. / (916) 319-2531