Sales - An Unlawful Trade Practice
Distilled Spirits Plants, Breweries, Wineries, Taxpaid Wine Bottling Houses, Wholesale
Liquor Dealers, Importers, Retailers, and Others Concerned
is the purpose of this circular?
purpose in publishing this circular is to remind industry members and others that
tie-in sales of alcohol beverages are prohibited. The tied house provisions of
the Federal Alcohol Administration Act define a prohibited means to induce as
a requirement that a retailer purchase one product in order to purchase a desired
is a tie-in sale?
tie-in sale described below is a form of an unlawful quota sale covered by the
Federal Alcohol Administration Act in 27 U.S.C. § 205(b)(7).
27 CFR § 6.72, "Tie-in" sales, reads:
act by an industry member of requiring that a retailer purchase one product (as
defined in § 6.11) in order to obtain another constitutes a means to induce
within the meaning of the Act. This includes the requirement to take a minimum
quantity of a product in standard packaging in order to obtain the same product
in some type of premium package, i.e., a distinctive decanter, or wooden or tin
box. This also includes combination sales if one or more products may be purchased
only in combination with other products and not individually. However, an industry
member is not precluded from selling two or more kinds or brands of products to
a retailer at a special combination price, provided the retailer has the option
of purchasing either product at the usual price, and the retailer is not required
to purchase any product it does not want. See § 6.93 for combination packaging
of products plus non-alcoholic items.
combination packaging addressed in § 6.93 involves combinations of alcohol
beverages with nonalcohol products. Section 6.72 addresses combinations of alcohol
beverages only because the section deals with "products" as defined
in § 6.11.
The tie-in sale results in a violation when the
means to induce results in the exclusion of a competitor's products. Under section
6.152(d), this type of practice is deemed to put a retailer's independence at
risk in the context of establishing exclusion. Section 6.152(d) covers "(t)he
act by an industry member of requiring a retailer to purchase one alcoholic beverage
product in order to be allowed to purchase another alcoholic beverage product
at the same time."
are some examples of tie-in sales?
sales occur when a retailer must purchase:
certain amount of regular distilled spirits, whether bottled or cased, in order
to be allowed to purchase distilled spirits in a special holiday container or
cases of Winery X's Merlot from a wholesaler only if it purchases ten cases of
the winery's Chardonnay.
particular tequila-margarita mix combination if it purchases a certain amount
of normal tequila cased goods. An industry member, however, may package a bottle
of tequila with a bottle of nonalcoholic margarita mix.
two-bottle package containing one each of a winery's Merlot and Chardonnay in
order to get the Merlot.
requirement is present in these examples because the retailer is forced, compelled,
or expected to purchase one product in order to obtain the product he or she wants.
A tie-in sale occurs regardless of whether the two products are the same brand
or different brands of products.
should I contact concerning the information in this circular?
you have any questions about tie-in sales, you may contact Desmond Wosser at e-mail
address Desmond.Wosser@ttb.treas.gov or write to the:
Attn: Desmond Wosser
Alcohol and Tobacco Tax and
650 Massachusetts Avenue
Washington, DC 20226
Arthur J. Libertucci
Alcohol and Tobacco Tax and Trade