Illinois-2013-HB5400-Introduced

98TH GENERAL ASSEMBLY State of Illinois 2013 and 2014 HB5400

Introduced , by Rep. Ann Williams

SYNOPSIS AS INTRODUCED:

815 ILCS 720/7 from Ch. 43, par. 307

Amends provisions of the Beer Industry Fair Dealing
Act setting forth

conditions under which a brewer shall pay reasonable compensation to a

wholesaler if a brewer cancels, terminates, or fails to renew an agreement

or unlawfully denies approval of, or unreasonably withholds consent to, an

assignment, transfer, or sale of a wholesaler's business assets or voting

stock or other equity securities, the brewer elects expedited binding arbitration, the wholesaler rejects the offer to arbitrate, and other conditions exist. Provides that a brewer shall, in good faith, make a payment of reasonable compensation to the wholesaler if the wholesaler retains a brand for 6 months (rather than 2 years) after the wholesaler rejects the offer to arbitrate and other conditions are met. Effective immediately.

LRB098 17575 JLS 52685 b

A BILL FOR

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LRB098 17575 JLS 52685 b

1 AN ACT concerning business.

2 Be it enacted by the People of the State of Illinois,

3 represented in the General Assembly:

4 Section 5. The Beer Industry Fair Dealing Act is amended by

5 changing Section 7 as follows:

6 (815 ILCS 720/7) (from Ch. 43, par. 307)

7 Sec. 7. Reasonable compensation.

8 (1) Subject to the right of any party to an agreement to

9 pursue any remedy provided in Section 9, any brewer that

10 cancels, terminates or fails to renew any agreement, or

11 unlawfully denies approval of, or unreasonably withholds

12 consent, to any assignment, transfer or sale of a wholesaler's

13 business assets or voting stock or other equity securities,

14 except as provided in this Act, shall pay the wholesaler with

15 which it has an agreement pursuant to this Act reasonable

16 compensation for the fair market value of the wholesaler's

17 business with relation to the affected brand or brands. The

18 fair market value of the wholesaler's business shall include,

19 but not be limited to, its goodwill, if any.

20 (1.5) The provisions of this subsection (1.5) shall only

21 apply if the brewer agrees to pay reasonable compensation as

22 defined in subsection (1) and the total annual volume of all

23 beer products supplied by a brewer to a wholesaler pursuant to

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1 agreements between such brewer and wholesaler represents 10% or

2 less of the total annual volume of the wholesaler's business

3 for all beer products supplied by all brewers. For purposes of

4 this subsection (1.5) only, "annual volume" means the volume of

5 beer products sold by the wholesaler in the 12-month period

6 immediately preceding receipt of the brewer's written offer

7 pursuant to this subsection (1.5).

8 If a brewer is required to pay reasonable compensation as

9 described in subsection (1) and the question of reasonable

10 compensation is the only issue between the parties, the brewer

11 shall, in good faith, make a written offer to pay reasonable

12 compensation. The wholesaler shall have 30 days from receipt of

13 the written offer to accept or reject the brewer's offer.

14 Failure to respond, in writing, to the written offer shall

15 constitute rejection of the offer to pay reasonable

16 compensation. If the wholesaler, in writing, accepts the

17 written offer, the wholesaler shall surrender the affected

18 brand or brands to the brewer at the time payment is received

19 from the brewer. If the wholesaler does not, in writing, accept

20 the brewer's written offer, either party may elect to submit

21 the determination of reasonable compensation to expedited

22 binding arbitration. If one party notifies the other party in

23 writing that it elects expedited binding arbitration, the other

24 party has 10 days from receipt of the notification to elect

25 expedited binding arbitration or to reject the arbitration in

26 writing. Failure to elect arbitration shall constitute

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1 rejection of the offer to arbitrate.

2 (A) If the parties agree to expedited binding

3 arbitration, the arbitration shall be subject to the

4 expedited process under the commercial rules of the

5 American Arbitration Association. The arbitration shall be

6 concluded within 90 days after the parties agree to

7 expedited binding arbitration under this Section, unless

8 extended by the arbitrator or one of the parties. The

9 wholesaler shall retain the affected brand or brands during

10 the period of arbitration, at the conclusion of which the

11 wholesaler shall surrender the affected brand or brands to

12 the brewer upon payment of the amount determined to be

13 reasonable compensation, provided the wholesaler shall

14 transfer the affected brand or brands to the brewer after

15 90 days if the arbitration proceedings are extended beyond

16 the 90 day limit at the request of the wholesaler.

17 Arbitration costs shall be paid one-half by the wholesaler

18 and one-half by the brewer. The award of the arbitrator

19 shall be final and binding on the parties.

20 (B) If the brewer elects expedited binding arbitration

21 but the wholesaler rejects the offer to arbitrate:

22 (i) The wholesaler may accept, in writing, any

23 written offer previously made by the brewer. If the

24 wholesaler selects this option, the wholesaler must

25 surrender the affected brand or brands to the brewer at

26 the time payment is received. If the wholesaler

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1 believes that the amount paid by the brewer is less

2 than reasonable compensation under subsection (1), the

3 wholesaler may bring a proceeding under subsection (2)

4 for the difference, but may not proceed under

5 subsection (3) of Section 9; or

6 (ii) The wholesaler may proceed against the brewer

7 under Section 9, provided the wholesaler must

8 surrender the affected brand or brands to the brewer if

9 a proceeding under Section 9 has not been initiated

10 within 90 days after the wholesaler rejects the offer

11 to arbitrate. Upon determination of reasonable

12 compensation pursuant to Section 9, the brewer shall

13 pay the wholesaler the amount so determined. Until

14 receiving payment from the brewer of the amount so

15 determined, the wholesaler shall retain the affected

16 brand or brands. If (a) the wholesaler retains the

17 affected brand or brands for a period of 6 months ~~2~~

18 ~~years~~ after the wholesaler rejects the offer to

19 arbitrate, (b) the amount of reasonable compensation

20 has not been determined, and (c) an injunction has not

21 been issued, the brewer shall, in good faith, make a

22 payment of reasonable compensation to the wholesaler.

23 If, however, the brewer fails to ship or make available

24 brands ordered by the wholesaler prior to the brewer

25 making any payment (including a good faith payment as

26 provided in this subsection) to the wholesaler, the

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1 wholesaler shall be entitled to injunctive relief and

2 attorneys' fees and shall subject the brewer to

3 punitive damages. Upon receipt of this payment, the

4 wholesaler must surrender the affected brand or brands

5 to the brewer, provided that such surrender shall not

6 affect the brewer's obligation to pay all amounts

7 ultimately determined due to the wholesaler under this

8 Act.

9 (C) If the wholesaler elects expedited binding

10 arbitration but the brewer rejects, the brewer may proceed

11 under Section 9 for the purpose of determining reasonable

12 compensation. Upon determination of reasonable

13 compensation pursuant to Section 9, the brewer shall pay

14 the wholesaler the amount so determined. Until receiving

15 payment from the brewer of the amount so determined, the

16 wholesaler shall retain the affected brand or brands. If

17 (a) the brewer initiates a proceeding under Section 9

18 within 90 days after the wholesaler rejects the offer to

19 arbitrate, (b) the wholesaler retains the affected brand or

20 brands for a period of 6 months ~~2 years~~ from the date the

21 wholesaler rejects the offer to arbitrate, (c) the amount

22 of reasonable compensation has not been determined, and (d)

23 an injunction has not been issued, the brewer shall, in

24 good faith, make a payment of reasonable compensation to

25 the wholesaler. If, however, the brewer fails to ship or

26 make available brands ordered by the wholesaler prior to

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1 the brewer making any payment (including a good faith

2 payment as provided in this subsection) to the wholesaler,

3 the wholesaler shall be entitled to injunctive relief and

4 attorneys' fees and shall subject the brewer to punitive

5 damages. Upon receipt of this payment, the wholesaler must

6 surrender the affected brand or brands to the brewer,

7 provided that such surrender shall not affect the brewer's

8 obligation to pay all amounts ultimately determined due to

9 the wholesaler under this Act.

10 (2) Except as otherwise provided in subsection (1.5), in

11 the event that the brewer and the beer wholesaler are unable to

12 mutually agree on the reasonable compensation to be paid for

13 the value of the wholesaler's business, as defined in this Act,

14 either party may maintain a civil suit as provided in Section 9

15 or the matter may, by mutual agreement of the parties, be

16 submitted to a neutral arbitrator to be selected by the parties

17 and the claim settled in accordance with the rules provided by

18 the American Arbitration Association. Arbitration costs shall

19 be paid one-half by the wholesaler and one-half by the brewer.

20 The award of the arbitrator shall be final and binding on the

21 parties.

22 (Source: P.A. 96-482, eff. 8-14-09; 97-1119, eff. 8-27-12.)

23 Section 99. Effective date. This Act takes effect upon

24 becoming law.