CONTRACT SALES TO U.S. MILITARY INSTALLATIONS
Proprietors of Distilled Spirits Plants, Wineries, Breweries,
Wholesale Liquor and Beer Dealers and Others Concerned:
The purpose of this circular is to amplify Industry Circular
75-20 which advised proprietors of the possibility of being found
in violation of section 5 of the Federal Alcohol Administration
Act by virtue of sales contracts obtained from the U.S. military
or other trade buyers. Numerous inquiries were received relative
to Industry Circular 75-20 and, therefore, the Bureau has de-
cided to restate and clarify its position regarding contract
arrangements with military nonappropriated fund activities.
Section 5(a) of the Federal Alcohol Administration Act pro-
vides that it shall be unlawful, within the jurisdictional limits
set forth, for any producer, wholesaler or importer to require,
by agreement or otherwise, that any retailer purchase alcoholic
beverages from him to the exclusion, in whole or in part, of
similar products sold by other producers, importers or wholesalers.
The Bureau has held that the "exclusive outlet" arrangements
prohibited under section 5(a) of the Act include any contractual
purchase agreements entered into by a producer, importer or whole-
saler with a retailer, which, by the terms of the contract, ex-
clude competitors' products. However, contracts which merely
establish a purchase price for a specified time; or a purchase
price for a specified quantity with no time limit requirement;
or which do not otherwise restrict purchases from other suppliers
would not be considered "exclusive outlet" arrangements within
the meaning of the Act.
1. Producers, importers and distributors are pro-
hibited (within jurisdictional limits) from
entering into "exclusive purchase" contracts
with the military, if the activity (officers
club, consolidated package store, or other non-
appropriated fund activity) is functioning solely
as a retailer.
2. Producers, importers and distributors are not
prohibited from entering into "exclusive purchase"
contracts with military activities which are
engaged in business as a wholesaler (as defined
in the Act) since section 5(a) relates only to
transactions between retailers and producers,
importers or distributors.
Inquiries concerning this circular should refer to its number and
be addressed to the Assistant Director, Regulatory Enforcement, Trade
Affairs Branch, Bureau of Alcohol, Tobacco and Firearms, 1200
Pennsylvania Avenue, NW, Washington, DC 20226.
Rex D. Davis