New York State Liquor Authority accepted a conditional no contest offer of $1.25 million from Heineken USA Incorporated for charges of providing illegal gifts and services to retailers.
In April 2018, the SLA received information from the Alcohol & Tobacco Tax & Trade Bureau (TTB) that Heineken was providing the company’s patented “BrewLock” keg systems to New York retailers at no cost.
On June 10, 2019, the SLA charged Heineken USA Inc. with forty-two violations of the ABC law, including thirty-two counts of providing illegal gifts and services and ten counts of failing to maintain adequate books and records. Heineken has since ceased their New York BrewLock program.
The BrewLock system is designed to dispense products offered exclusively by Heineken, an anti-competitive practice that illegally incentivizes retailers to purchase beer produced by the global brewing giant.
The SLA investigation uncovered Heineken gave away over 800 BrewLock systems from 2014 to 2015, a product valued at approximately $500. In addition to providing the keg systems free of charge, the SLA investigation also established Heineken sought to conceal a transaction involving their “Blade” system, a kegerator type-device, by utilizing a third party to incentivize a retailer in their effort to obtain a competitive advantage over other brewers.
The gifts and services provisions of the Alcoholic Beverage Control (ABC) law prohibits manufacturers and wholesalers from giving anything of value to retailers to artificially incentivize sales.
Gifts and services refer to a broad array of potential inducements including money, credit extensions, services or free products that create an incentive for the retailer to purchase products predominately or exclusively from a specific supplier.
These laws help maintain a level playing field where small independent brewers can compete, the agency said, ensuring that competition for beer taps are determined by price and quality and not influenced by offerings of free equipment and services.
“Whether you are small craft brewery or a major international company, you have to comply with the rules and laws of New York. Our agency remains committed to rooting out anti-competitive practices that artificially restrict consumer choice and place small manufacturers at a disadvantage,” State Liquor Authority Chairman Vincent Bradley said.