For Immediate Release: July 18, 2019
Contact: Bill Crowley [email protected]
State Liquor Authority Fines Heineken $1.25 Million for Illegal Gifts and Services Violations
Heineken Charged with Providing Free Keg Systems to Stimulate Sales
The State Liquor Authority (SLA) announced the acceptance of a conditional no contest offer of $1.25 million from Heineken USA Incorporated for charges of providing illegal gifts and services to retailers. The Members of the SLA, Chairman Vincent Bradley, Commissioner Lily Fan and Commissioner Greeley Ford, accepted this offer at a meeting of the Full Board on Wednesday, July 17, 2019.
In April 2018, the SLA received information from the Alcohol and Tobacco Tax and Trade Bureau (TTB) that Heineken was providing the company’s patented “BrewLock” keg systems to New York retailers at no cost. 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.
Under the gifts and services provisions of the Alcoholic Beverage Control (ABC) law, manufacturers and wholesalers are prohibited 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, ensuring that competition for beer taps are determined by price and quality and not influenced by offerings of free equipment and services.
State Liquor Authority Chairman Bradley said, “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.”
On June 10, 2019, the SLA charged Heineken USA Incorporated 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 New York State Liquor Authority regulates and controls the manufacture, sale and distribution of alcoholic beverages within the State. The Authority works with local law enforcement agencies and localities across the State to ensure compliance with the Alcoholic Beverage Control Law. In addition, the Authority issues and renews licenses and permits to manufacturers, distributors, wholesalers, and retailers of alcoholic beverages.
These investigations were conducted and prosecuted by the major cases team, including Beverage Control Investigator Robert Benedetto, and the Authority’s leading major case prosecutor, AGC William Brennan.