TTB Secures $5 Million Fine and Suspensions for Trade Practice Violations

The Alcohol Tax and Trade Bureau (TTB) recently secured a large settlement with Anheuser-Busch for various violations of the Federal Alcohol Administration Act (FAAA).  

The TTB and ABI negotiated an offer in compromise where AB agreed to pay a fine of $5 million in settlement of various allegations of trade practice violations.  Moreover, the specific terms of the exact settlement and alleged infractions are not public.

There are a minority of states that allow Anheuser-Busch to own and operate distribution companies.  Two of their operations in Colorado were cited by the TTB for illegal activities at a professional sports stadium, ski resorts and other activities.   The AB-owned distributor in Denver was suspended for four days and the distributorship in Littleton suspended for two days.  These suspensions were served before the TTB announcement.

In late 2018, the state of Colorado fined Anheuser-Busch $500,000 for trade practice violations for these violations.

According to the TTB press release, they allege that A-B violated the FAA Act trade practice laws set forth in 27 U.S.C. § 205 by:

• Entering into sponsorship agreements with various entities in the sports and entertainment industries requiring concessionaires and other retailers to purchase A-B’s malt beverages and prohibiting them from purchasing specific competitor brands;
• Inducing sports industry concessionaires to purchase A-B’s malt beverages by furnishing fixtures, equipment, and services;
• Reimbursing, through credit card swipes, retailers for the cost of installing malt beverage draft dispensing systems, thereby inducing them to purchase A-B’s malt beverages;
• Requiring retailers to purchase A-B’s malt beverages in return for such retailers’ use of equipment A-B furnished them free of charge or below market value;
• Using third parties (business entities and payment services) to provide money or things of value to retailers in exchange for placement of A-B’s malt beverages; and
• Paying retailers purportedly for items such as consumer samplings, when, in fact, the retailers did not receive the goods or services purportedly purchased, and such payments were actually for A-B product placement.

The TTB further notes, “This $5 million OIC resolves any such alleged violations that may have taken place throughout the United States through July 2, 2020.”