After issuing a record $2.5 million fine to Heineken USA (HUSA) in April, the Alcohol and Tobacco Tax and Trade Bureau (TTB) this month announced the acceptance of a $420,000 offer in compromise from Constellation Brands’ Crown Imports LLC subsidiary.
According to the TTB, between January 1, 2016, and April 25, 2019, Constellation used a third party to make illegal payments to retailers in an effort to secure draft beer placements.
It’s not clear which retailers were involved in the scheme, however, TTB spokesman Thomas Hogue told Brewbound that the agency’s investigation “related to activities in Illinois.”
A filing lists 131 S. Dearborn Street, Suite 1200, Chicago, Illinois — an address belonging to Constellation Brands — as the location of where the violations occurred.
The fine comes as the TTB has stepped up its policing efforts of the beer industry over the last year, collecting nearly $6 million in the process.
In addition to fining HUSA $2.5 million for illegally supplying free draft systems to retailers, and for making slotting fee payments, the TTB last December accepted $1.5 million from Miami’s Eagle Brands for inducing retailers and blocking out competing brands. The beer distributor also allegedly provided free draft systems to retailers with the understanding that only the wholesaler’s products could be served on those taps.
Last May, the agency accepted $900,000 from Ohio’s Warsteiner Importers Agency Inc. for engaging in tied house, commercial bribery, and exclusive outlet violations.
In March, the TTB fined Illinois’ Brewers Distributing Company $350,000 for violating federal consignment sales laws. The agency also accepted $325,000 from Illinois’ Elgin Beverage last year for pay-to-play violations.
Asked why HUSA was fined significantly more than Constellation, Hogue said the agency looks at the “egregiousness” of the violations when determining its penalties.
“That was a nationwide problem,” he said of HUSA’s alleged Federal Alcohol Administration (FAA) Act violations.
Earlier this year, leaders from the Brewers Association, Beer Institute, National Beer Wholesalers Association and other alcohol lobbying groups penned a letter to House and Senate representatives serving on their respective appropriations committees urging Congress to fund the TTB in the fiscal year 2020 at $139 million. In their request, the groups specifically noted the TTB’s role in “enforcing the Federal Alcohol Administration (FAA) Act, including its provisions to educate and preclude unfair trade practices.”
“The beverage alcohol industry needs a well-funded TTB to operate successfully,” they wrote.