THE PENULTIMATE PARAGRAPH DOES NOT APPLY TO WINE TRANSACTIONS
Proprietors of Bonded Wineries, Bonded Wine Cellars,
Breweries, Importers and Wholesalers of Distilled Spirits,
Wine and Malt Beverages, and others concerned:
Purpose. This circular is issued to alert those
industry members that formerly dealt in beer only and are
expanding to wine, that 27 U.S.C. §§ 205(a) through 205(d),
Unfair Competition and Unlawful Practices, are applicable to
all transactions involving wine without regard to State law.
Inasmuch as the scope of the penultimate paragraph of
27 U.S.C. § 205 is limited to malt beverage transactions
only, transactions involving wine are not affected.
Background. With the increase in the number of brewers
and wholesale dealers in beer expanding into the wine
business, we have received numerous inquiries regarding the
applicability of the FAA Act, specifically the "Tied House"
provisions, to such transactions. There is a general lack
of awareness on the part of such industry members, especially
those doing business in states which possess less stringent
laws, that compliance with State law does not automatically
place them in compliance with the FAA Act, as was the case
when they dealt in beer only.
In general, industry members are prohibited from using
certain specified means to require or induce the purchases of
trade buyers assuming the other requisite elements of the
statute are present. In particular, the furnishing, giving,
renting, lending, or selling of equipment and the providing
of services by industry members to retailers, are proscribed
means to induce within the scope of 27 U.S.C. § 205 (b),
unless specifically excepted by regulation. The penultimate
paragraph of 27 U.S.C. § 205 restricts such trade practices
for malt beverage transactions only insofar as the State in
which the transaction occurs has enacted a similar State law
which also prohibits such activity. However, for
transactions involving wine, all of the proscriptions set
forth in 27 U.S.C. §§ 205(a) thru 205(d) are applicable,
regardless of State law.
Subpart D of 27 CFR Part 6, identifies all of the
exceptions referenced in the preceding paragraph. Of
particular significance to dealers of wine in keg type
containers is 27 CFR § 6.89, which permits the sale of
"tapping accessories" to retailers under prescribed
Industry members should note that "wine cooler"
products are subject to the trade practice provisions of the
FAA Act only if they contain at least seven (7) percent
alcohol by volume.
Inquiries. Inquiries concerning this circular should
refer to the circular number and be addressed to the Bureau
of Alcohol, Tobacco and Firearms, 1200 Pennsylvania Avenue
NW, Washington, DC 20226, ATTN: Tax and Trade Compliance