Bill Text: IL SB1282 | 2009-2010 | 96th General Assembly | Enrolled

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Bill Title: Amends the Liquor Control Act of 1934. Contains language concerning registration requirements for non-resident dealers and foreign importers of alcoholic liquors who are not manufacturers. Amends the Beer Industry Fair Dealing Act. Provides that provisions concerning reasonable compensation and arbitration apply only if the brewer agrees to pay reasonable compensation as defined under the Act and the total annual volume of all beer products supplied by a brewer to a wholesaler pursuant to agreements between such brewer and wholesaler represents 10% (rather than 20%) or less of the total annual volume of the wholesaler's business for all beer products supplied by all brewers, provided that such 10% volume of all beer products supplied by the wholesaler to the retailer does not exceed 10% of annual gross receipts. Makes other changes. Effective immediately.

Sponsorship: Moderate Partisan Bill (Democrat 7-1)

Status: (Passed) 2009-08-14 - Public Act . . . . . . . . . 96-0482 [SB1282 Detail]

Download: Illinois-2009-SB1282-Enrolled.html

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AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Liquor Control Act of 1934 is amended by
changing Section 6-9 as follows:
(235 ILCS 5/6-9) (from Ch. 43, par. 126)
Sec. 6-9. Registration of trade marks; sale within
geographical area; delivery to authorized persons. The
Legislature hereby finds and declares that for purposes of
ensuring the preservation and enhancement of interbrand
competition in the alcoholic liquor industry within the State,
ensuring that importation and distribution of alcoholic liquor
in the State will be subject to thorough and inexpensive
monitoring by the State, reducing the importation of illicit or
untaxed alcoholic liquor into the State, excluding misbranded
alcoholic liquor products from the State, providing incentives
to distributors to service and sell to larger numbers of retail
licensees in the geographic area where such distributors are
engaged in business, and reducing the amount of spoiled and
overaged alcoholic liquor products sold to consumers, it is
necessary to restrict the purchase of alcoholic liquors at
wholesale in the State to those persons selected by the
manufacturer, distributor, importing distributor or foreign

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importer who owns or controls the trade mark, brand or name of
the alcoholic liquor products sold to such persons, and to
restrict the geographic area or areas within which such persons
sell such alcoholic liquor at wholesale, as provided in this
Section.
Each manufacturer, non-resident dealer, distributor,
importing distributor, or foreign importer who owns or controls
the trade mark, brand or name of any alcoholic liquor shall
register with the State Commission, in the Chicago office, on
or before the effective date, the name of each person to whom
such manufacturer, non-resident dealer, distributor, importing
distributor, or foreign importer grants the right to sell at
wholesale in this State any such alcoholic liquor, specifying
the particular trade mark, brand or name of alcoholic liquor as
to which such right is granted, the geographical area or areas
for which such right is granted and the period of time for
which such rights are granted to such person. Each
manufacturer, non-resident dealer, distributor or importing
distributor, or foreign importer who is required to register
under this Section must furnish a copy of the registration
statement at the time of appointment to the person who has been
granted the right to sell alcoholic liquor at wholesale.
However, if a person who has been appointed the right to sell
alcoholic liquor at wholesale does not receive a copy of the
registration statement as required under this Section, such
person may file a registration statement with the State

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Commission, provided that the person furnishes a copy of that
registration statement to the manufacturer, non-resident
dealer, distributor, importing distributor, or foreign
importer within 30 days of filing the registration statement.
The registration statement shall state:
(1) the name of the person appointed;
(2) the name of the manufacturer, non-resident dealer,
distributor, importing distributor, or foreign importer from
whom the person received the right to sell alcoholic liquor;
(3) the particular trade mark, brand, or name of alcoholic
liquor as to which the right to sell at wholesale is granted;
and
(4) the geographical areas for which the right to sell at
wholesale is granted.
Such manufacturer, non-resident dealer, distributor,
importing distributor, or foreign importer may grant the right
to sell at wholesale any trade mark, brand or name of any
alcoholic liquor in any geographical area to more than one
person. If the registration is received after the effective
date, the Commission shall treat the date the registration was
received in the Chicago office as the effective date. Such
registration shall be made on a form prescribed by the State
Commission and the State Commission may require such
registration to be on a form provided by it.
A non-resident dealer or foreign importer who is not a
manufacturer shall file the registration statement jointly

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with the manufacturer identifying the person authorized by the
manufacturer to sign the registration statement on behalf of
the manufacturer.
No such registration shall be made in any other manner than
as is provided in this Section and only those persons
registered by the manufacturer, non-resident dealer,
distributor, importing distributor or foreign importer, shall
have the right to sell at wholesale in this State, the brand of
alcoholic liquor specified on the registration form.
However, a licensed Illinois distributor who has not been
registered to sell a brand of alcoholic liquor, but for a
period of 2 years prior to November 8, 1979 has been engaged in
the purchase of a brand for resale from a licensed Illinois
distributor who has the right to sell that brand at wholesale,
may continue to purchase and resell the brand at wholesale, and
may purchase from the same distributor and resell at wholesale
any new brands of the same manufacturer, provided that:
(1) Within 60 days after November 8, 1979 he identifies
the brand which he so purchased to the State Commission and
the Commission within 30 days thereafter verifies that the
purchases have occurred;
(2) Thereafter, he notifies the State Commission in
writing of any brands of the same manufacturer which he
wishes to purchase from the same distributor that were not
available for distribution on or before November 8, 1979,
and that the Commission within 30 days of such notification

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verifies that the brand is a new brand of the same
manufacturer, and that the same licensed Illinois
distributor has the right to sell the new brand at
wholesale;
(3) His licensed business address is within the
geographical area for which the licensed Illinois
distributor from whom the purchases are made has the right
to sell said brand or brands of alcoholic liquor; and
(4) His sales are made within the geographical area for
which the licensed Illinois distributor from whom the
purchases are made has the right to sell the brand or
brands of alcoholic liquor and only to retail licensees
whose licensed premises are located within the
aforementioned geographical area.
No person to whom such right is granted shall sell at
wholesale in this State any alcoholic liquor bearing such trade
mark, brand or name outside of the geographical area for which
such person holds such selling right, as registered with the
State Commission, nor shall he sell such alcoholic liquor
within such geographical area to a retail licensee if the
premises specified in such retailer's license are located
outside such geographical area. Any licensed Illinois
distributor who has not been granted the right to sell any
alcoholic liquor at wholesale and is purchasing alcoholic
liquor from a person who has been granted the right to sell at
wholesale may sell and deliver only to retail licensees whose

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licensed premises are within the same geographical area as the
person who has been granted the right to sell at wholesale.
No manufacturer, importing distributor, distributor,
non-resident dealer, or foreign importer shall sell or deliver
any package containing alcoholic liquor manufactured or
distributed by him for resale, unless the person to whom such
package is sold or delivered is authorized to receive such
package in accordance with the provisions of this Act.
(Source: P.A. 92-105, eff. 1-1-02.)
Section 10. The Beer Industry Fair Dealing Act is amended
by changing Section 7 as follows:
(815 ILCS 720/7) (from Ch. 43, par. 307)
Sec. 7. Reasonable compensation.
(1) Subject to the right of any party to an agreement to
pursue any remedy provided in Section 9, any Any brewer that
cancels, terminates or fails to renew any agreement, or
unlawfully denies approval of, or unreasonably withholds
consent, to any assignment, transfer or sale of a wholesaler's
business assets or voting stock or other equity securities,
except as provided in this Act, shall pay the wholesaler with
which it has an agreement pursuant to this Act reasonable
compensation for the fair market value of the wholesaler's
business with relation to the affected brand or brands. The
fair market value of the wholesaler's business shall include,

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but not be limited to, its goodwill, if any.
(1.5) The provisions of this subsection (1.5) shall only
apply if the brewer agrees to pay reasonable compensation as
defined in subsection (1) and when the total annual volume of
all beer products supplied by a brewer to a wholesaler pursuant
to agreements between such brewer and wholesaler represents 15%
20% or less of the total annual volume of the wholesaler's
business for all beer products supplied by all brewers. For
purposes of this subsection (1.5) only, "annual volume" means
the volume of beer products sold by the wholesaler in the
12-month period immediately preceding receipt of the brewer's
written offer pursuant to this subsection (1.5).
If a brewer is required to pay reasonable compensation as
described in subsection (1) and the question of reasonable
compensation is the only issue between the parties, the brewer
shall, in good faith, make a written offer to pay reasonable
compensation. The wholesaler shall have 30 days from receipt of
the written offer to accept or reject the brewer's offer.
Failure to respond, in writing, to the written offer shall
constitute rejection of the offer to pay reasonable
compensation. If the wholesaler, in writing, accepts the
written offer, the wholesaler shall surrender the affected
brand or brands to the brewer at the time payment is received
from the brewer. If the wholesaler does not, in writing, accept
the brewer's written offer, either party may elect to submit
the determination of reasonable compensation to expedited

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binding arbitration. If one party notifies the other party in
writing that it elects expedited binding arbitration, the other
party has 10 days from receipt of the notification to elect
expedited binding arbitration or to reject the arbitration in
writing. Failure to elect arbitration shall constitute
rejection of the offer to arbitrate.
(A) If the parties agree to expedited binding
arbitration, the arbitration shall be subject to the
expedited process under the commercial rules of the
American Arbitration Association. The arbitration shall be
concluded within 90 days after the parties agree to
expedited binding arbitration under this Section, unless
extended by the arbitrator or one of the parties. The
wholesaler shall retain the affected brand or brands during
the period of arbitration, at the conclusion of which the
wholesaler shall surrender the affected brand or brands to
the brewer upon payment of the amount determined to be
reasonable compensation, provided the wholesaler shall
transfer the affected brand or brands to the brewer after
90 days if the arbitration proceedings are extended beyond
the 90 day limit at the request of the wholesaler.
Arbitration costs shall be paid one-half by the wholesaler
and one-half by the brewer. The award of the arbitrator
shall be final and binding on the parties.
(B) If the brewer elects expedited binding arbitration
but the wholesaler rejects the offer to arbitrate:

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(i) The wholesaler may accept, in writing, any
written offer previously made by the brewer. If the
wholesaler selects this option, the wholesaler must
surrender the affected brand or brands to the brewer at
the time payment is received. If the wholesaler
believes that the amount paid by the brewer is less
than reasonable compensation under subsection (1), the
wholesaler may bring a proceeding under subsection (2)
for the difference, but may not proceed under
subsection (3) of Section 9; or
(ii) The wholesaler may proceed against the brewer
under Section 9, provided the wholesaler must
surrender the affected brand or brands to the brewer if
a proceeding under Section 9 has not been initiated
within 90 days after the wholesaler rejects the offer
to arbitrate. Upon determination of reasonable
compensation pursuant to Section 9, the brewer shall
pay the wholesaler the amount so determined. Until
receiving payment from the brewer of the amount so
determined, the wholesaler shall retain the affected
brand or brands. If (a) the wholesaler retains the
affected brand or brands for a period of 2 years after
the wholesaler rejects the offer to arbitrate, (b) the
amount of reasonable compensation has not been
determined, and (c) an injunction has not been issued,
the brewer shall, in good faith, make a payment of

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reasonable compensation to the wholesaler. If,
however, the brewer fails to ship or make available
brands ordered by the wholesaler prior to the brewer
making any payment (including a good faith payment as
provided in this subsection) to the wholesaler, the
wholesaler shall be entitled to injunctive relief and
attorneys' fees and shall subject the brewer to
punitive damages. Upon receipt of this payment, the
wholesaler must surrender the affected brand or brands
to the brewer, provided that such surrender shall not
affect the brewer's obligation to pay all amounts
ultimately determined due to the wholesaler under this
Act.
(C) If the wholesaler elects expedited binding
arbitration but the brewer rejects, the brewer may proceed
under Section 9 for the purpose of determining reasonable
compensation. Upon determination of reasonable
compensation pursuant to Section 9, the brewer shall pay
the wholesaler the amount so determined. Until receiving
payment from the brewer of the amount so determined, the
wholesaler shall retain the affected brand or brands. If
(a) the brewer initiates a proceeding under Section 9
within 90 days after the wholesaler rejects the offer to
arbitrate, (b) the wholesaler retains the affected brand or
brands for a period of 2 years from the date the wholesaler
rejects the offer to arbitrate, (c) the amount of

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reasonable compensation has not been determined, and (d) an
injunction has not been issued, the brewer shall, in good
faith, make a payment of reasonable compensation to the
wholesaler. If, however, the brewer fails to ship or make
available brands ordered by the wholesaler prior to the
brewer making any payment (including a good faith payment
as provided in this subsection) to the wholesaler, the
wholesaler shall be entitled to injunctive relief and
attorneys' fees and shall subject the brewer to punitive
damages. Upon receipt of this payment, the wholesaler must
surrender the affected brand or brands to the brewer,
provided that such surrender shall not affect the brewer's
obligation to pay all amounts ultimately determined due to
the wholesaler under this Act.
(2) Except as otherwise provided in subsection (1.5), in
the event that the brewer and the beer wholesaler are unable to
mutually agree on the reasonable compensation to be paid for
the value of the wholesaler's business, as defined in this Act,
either party may maintain a civil suit as provided in Section 9
or the matter may, by mutual agreement of the parties, be
submitted to a neutral arbitrator to be selected by the parties
and the claim settled in accordance with the rules provided by
the American Arbitration Association. Arbitration costs shall
be paid one-half by the wholesaler and one-half by the brewer.
The award of the arbitrator shall be final and binding on the
parties.

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(Source: P.A. 89-716, eff. 2-21-97.)
Section 99. Effective date. This Act takes effect upon
becoming law.