House Co-Sponsorship Memoranda

House of Representatives
Session of 2013 - 2014 Regular Session

Posted:	November 19, 2013 12:02 PM
From:	Representative Stan Saylor
To:	All House members
Subject:	Prohibiting Charging for Brand Rights

Partnering with distributors remains one of the most critical elements for a brewer's success in a vibrant and dynamic three-tier system. Brewers want access to the marketplace, and they want the exclusive distributor's focus on building their brands over the long-term. The Pennsylvania Liquor Code currently lays out this relationship between the brewer and wholesaler. Recently, however, a brewer in the state of Ohio and a few brewers here in our state have begun a practice of requiring/requesting upfront payments to be made by wholesalers in order to obtain the territorial rights for their brands. Ohio is in the process of taking action and their regulator has determined that this practice is not legal. In Pennsylvania, we do not have anything on the books that would address this practice. It is my belief that a beer wholesaler who pays a manufacturer for distribution rights will direct their sales force to sell that product to the detriment of other products in an effort to recoup the funds paid to that brewer. These would create an implied promise to give preference to that brewer’s product line over products of other brewers. Therefore, my legislation would stop this practice and make it unlawful for a manufacturer to require/request a beer wholesaler pay upfront, a certain amount of money, in order to obtain distribution rights in Pennsylvania. I hope you will consider joining me in support of this legislation.
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Introduced as HB1871