ARC 8723C

ARC 8723C

Proposing rulemaking related to trade practices
and providing an opportunity for public comment

A Regulatory Analysis for this rulemaking was published in the Iowa Administrative Bulletin on November 13, 2024. A public hearing was held on the following date(s):

●December 3, 2024

No public comments on the Regulatory Analysis were received at the hearing or in writing. No changes have been made after publication of the Regulatory Analysis. The Administrative Rules Coordinator provided preclearance for publication of this Notice of Intended Action on December 10, 2024.

Any persons who intend to attend a public hearing and have special requirements, such as those related to hearing or mobility impairments, should contact the Department and advise of specific needs.

ITEM 1.Adopt the following new701—Chapter 1003:

CHAPTER 1003

TRADE PRACTICES

The rules in this chapter, adopted pursuant to Iowa Code section 123.186, apply to transactions between industry members, trade buyers and retailers. The rules specify practices considered to be fair and allowable as well as practices deemed to be unfair or inducements. This chapter does not exempt any industry member, trade buyer or retailer from the requirements of any federal law or regulation.

As used in this chapter, the words, terms and phrases defined in this part shall apply, unless a different meaning is clearly indicated by the context.

701—1003.1(123) Definitions.

“Alcoholic liquor” means the same as defined in Iowa Code section 123.3(4). For the purposes of this chapter, “alcoholic liquor” includes “native distilled spirits” as defined in Iowa Code section 123.3(34).

“Beer” means the same as defined in Iowa Code section 123.3(6). For the purposes of this chapter, “beer” includes “canned cocktail” as defined in Iowa Code section 123.3(10) and “high alcoholic content beer” as defined in Iowa Code section 123.3(22).

“Brand” means each alcoholic liquor, wine, or beer packaged and sold under a separate name, class, type, or kind designation (wine appellation of origin, wine vintage date, alcoholic liquor age, percentage of alcohol, etc.).

“Department” means the department of revenue.

“Equipment” includes but is not limited to mechanized and nonmechanized refrigeration units and devices used in the storage, dispensing, and cooling of alcoholic liquor, wine and beer, tap boxes, party wagons, dispensing systems, and shelving. Equipment does not include tapping accessories (including faucets, rods, vents, taps, hoses, washers, couplings, gas gauges, vent tongues, shanks, check valves, and picnic pumps) that are used in dispensing wine or beer from kegs or bulk packaging.

“Exclusion,” in whole or in part, means a practice by an industry member, whether direct, indirect, or through an affiliate, that places (or has the potential to place) retailer independence at risk by means of a tie or link between the industry member and retailer or by any other means of industry member control over the retailer, and such practice results in the retailer’s purchasing less than it would have of a competing industry member’s product. The following criteria are indications that a particular practice places retailer independence at risk. A practice need not meet all of the criteria specified below in order to place retailer independence at risk.

1.The practice restricts or hampers the free economic choice of a retailer to decide which products to purchase or the quantity in which to purchase them for sale to consumers.

2.The industry member obligates the retailer to participate in a promotion to obtain the industry member’s product.

3.The retailer has a continuing obligation to purchase or otherwise promote the industry member’s product.

4.The retailer has a commitment not to terminate its relationship with the industry member with respect to purchase of the industry member’s products.

5.The practice involves the industry member in the day-to-day operations of the retailer. For example, the industry member controls the retailer’s decisions on which brand of products to purchase, the pricing of products, or the manner in which the products will be displayed on the retailer’s premises.

6.The practice is discriminatory in that it is not offered to all retailers in the local market on the same terms without business reasons present to justify the difference in treatment.

“Fixtures” includes but is not limited to bar sinks, bars, light fixtures, and indoor or outdoor signs used to identify the retail establishment.

“Furnishings” includes but is not limited to money, services, chairs, tables, lamps, pictures, remodeling costs, bar sinks, carpeting, bar stools, display cabinets and curios, linens, linen services, china and silver or stainless steel eating and other utensils, decorations, and sound systems used by a retailer. (Durable and disposable glassware is addressed in rule 701—1003.4(123).)

“Furnishings, fixtures and equipment” does not include the items identified in rule 701—1003.2(123), subrules 1003.3(1) and 1003.3(2), rule 701—1003.4(123), rule 701—1003.5(123), rule 701—1003.6(123), or paragraph 1003.12(2)“a.”

“Industry member” means an alcoholic beverages manufacturer, including a distiller, vintner or brewer, bottler, importer, wholesaler, representative, broker, agent, officer, director, shareholder not considered an institutional investor as defined in Iowa Code section 123.3(27), partner or employee of each of the above.

“Product” means alcoholic liquor, wine, or beer as defined in Iowa Code chapter 123.

“Retailer” means the holder of an alcoholic beverages license, agents, officers, directors, shareholders not considered institutional investors as defined in Iowa Code section 123.3(27), partners, and employees who sell alcoholic liquor, wine or beer to consumers for consumption on or off the premises of the licensee.

“Sampling” means the practice of industry members giving product to a retailer for the purpose of market research, education, promotion of the product, or determination of the flavor of the product.

“Tasting” means the presentation and serving of a product by industry members or retailers to consumers for the purpose of market research, education, promotion of the product, or determination of the flavor of the product.

“Trade buyer” means a person who is a wholesaler or retailer of alcoholic liquor, wine, or beer.

“Trade spending” means the practice of industry members promoting their brand by purchasing alcoholic beverages for consumers where alcoholic beverages are sold and served for on-premises consumption.

“Wine” means the same as defined in Iowa Code section 123.3(53). For the purposes of this chapter, “wine” includes “native wine” as defined in Iowa Code section 123.3(36).

This rule is intended to implement Iowa Code sections 123.45 and 123.186.

The rules in this part specify industry member practices that are allowed under the conditions and within the limitations prescribed. The rules apply to transactions between industry members and retailers.

701—1003.2(123) Product displays.

1003.2(1) Except as otherwise provided in this rule, an industry member is prohibited, directly or indirectly, from inducing a retailer to purchase any products from the industry member to the exclusion, in whole or in part, of products sold or offered for sale by other industry members by any of the following means:

a.Renting, leasing, or buying display space from a retailer.

b.Paying a retailer to set up a display.

c.Giving a special price on the products featured in the display or other products sold by the industry member.

d.Providing free merchandise to a retailer in return for a display.

1003.2(2) An industry member may give, furnish, sell, rent or loan product displays, such as wine racks, bins, barrels, casks and portable, disposable shelving from which alcoholic beverages are displayed and sold, provided that the product display bears conspicuous and substantial advertising matter on the product or the industry member that is permanently inscribed or securely affixed. The name and address of the retailer may appear on the product display. A product display is prohibited if it has secondary value to the retailer, for other than advertising purposes. An industry member is prohibited from requiring a retailer to purchase a specific quantity of alcoholic liquor, wine or beer in order to receive a product display.

1003.2(3) The total value of all product displays may not exceed $300 per brand at any one time in any one retail establishment. The value of the product display is the industry member’s original cost of the item.

1003.2(4) Industry members may not pool or combine their dollar limitations in order to provide a retailer with a product display that exceeds $300. Industry members are prohibited from pooling or combining several brands to provide a retailer with a product display that exceeds $300.

1003.2(5) An industry member shall keep and maintain records in accordance with rule 701—1003.16(123).

This rule is intended to implement Iowa Code section 123.186.

701—1003.3(123) Retailer advertising utensils, consumer advertising specialties, and retailer wearing apparel.

1003.3(1) Retailer advertising utensils.

a.An industry member may supply, give, or sell retailer advertising utensils that are primarily valuable as point-of-sale advertising intended for use on the premises of the retail establishment. Such materials include but are not limited to posters, placards, designs, inside signs (electric, mechanical or otherwise), billboards, window decorations, trays, coasters, mats, menu cards, meal checks, paper napkins, foam scrapers, back bar mats, thermometers, clocks, calendars, and alcoholic beverage lists or menus.

b.All retailer advertising utensils must bear conspicuous and substantial advertising matter about the product or the industry member that is permanently inscribed or securely affixed. The name and address of the retailer may appear on the point-of-sale advertising materials.

c.An industry member shall not pay or credit a retailer, directly or indirectly, for using retailer advertising utensils or for any expense incidental to their use.

1003.3(2) Consumer advertising specialties.

a.An industry member may furnish, give, or sell consumer advertising specialties to a retailer for unconditional distribution by the retailer to consumers. Consumer advertising specialties may include such items as nonalcoholic mixers, bottle or can openers, corkscrews, shopping bags, matches, printed recipes, pamphlets, cards, leaflets, blotters, postcards, pens or pencils, shirts, caps, and visors.

b.Consumer advertising specialties must bear conspicuous and substantial advertising matter about the product or the industry member that is permanently inscribed or securely affixed.

c.An industry member shall not pay or credit a retailer, directly or indirectly, for distributing consumer advertising specialties or for any expense incidental to their use. There is no dollar limitation on consumer souvenirs.

d.In the event a consumer advertising specialty also advertises a local event not sponsored by the retailer, the consumer advertising specialty need only be offered by the industry member to the retailers within the local community where the event is held.

1003.3(3) Retailer wearing apparel. An industry member may sell wearing apparel, including sweatshirts, T-shirts, pants, shorts, hats, caps, polo-type shirts, jackets, jerseys and other similar clothing, that bears substantial permanently affixed advertising identifying the industry member’s name or products to a retailer for use by the retailer and the retailer’s employees at not less than the industry member’s laid-in cost of the items. There is no dollar limitation on wearing apparel that may be sold by an industry member to a retailer.

1003.3(4) Recordkeeping. An industry member shall keep and maintain records in accordance with rule 701—1003.16(123).

This rule is intended to implement Iowa Code sections 123.45 and 123.186.

701—1003.4(123) Glassware.

1003.4(1) Disposable beer or wine glassware.

a.An industry member engaged in the manufacturing or wholesaling of beer or wine may sell disposable glassware (including foam, paper and one-use plastic cups) to a retailer.

b.An industry member engaged in the manufacturing or wholesaling of beer or wine is prohibited from selling disposable glassware to a retailer at less than the industry member’s laid-in cost of the disposable glassware.

1003.4(2) Commemorative beer or wine glassware.

a.An industry member engaged in the manufacturing or wholesaling of beer or wine may sell commemorative glassware that bears substantial advertising matter identifying the industry member or the industry member’s product to off-premises retailers for resale to consumers.

b.An industry member engaged in the manufacturing or wholesaling of beer or wine is prohibited from selling commemorative glassware to off-premises retailers at less than the industry member’s laid-in cost.

1003.4(3) Durable or disposable alcoholic liquor glassware.

a.An industry member engaged in the manufacturing or wholesaling of alcoholic liquor may sell durable or disposable (including foam, paper or one-use plastic cups) glassware to a retailer. The glassware must bear advertising matter that identifies the industry member or the industry member’s product.

b.An industry member engaged in manufacturing or wholesaling alcoholic liquor is prohibited from selling durable or disposable glassware to a retailer at less than the industry member’s laid-in cost of the disposable or durable glassware.

1003.4(4) Recordkeeping. An industry member shall keep and maintain records in accordance with rule 701—1003.16(123).

This rule is intended to implement Iowa Code sections 123.45 and 123.186.

701—1003.5(123) Tapping accessories and coil cleaning service.

1003.5(1) Tapping accessories.

a.An industry member may sell tapping accessories, identified in rule 701—1003.1(123), and carbon dioxide to a retailer at not less than the industry member’s laid-in cost.

b.An industry member may install tapping accessories at a retail establishment provided the retailer bears the cost of initial installation.

1003.5(2) Coil cleaning service. An industry member may sell, furnish or give wine and beer coil cleaning services, including carbon dioxide filters and other necessary accessories to properly clean the coil and affix carbon dioxide filters, to a retailer. The manufacturer shall be responsible for paying for the costs if carbon dioxide filters are provided.

This rule is intended to implement Iowa Code sections 123.45 and 123.186.

701—1003.6(123) Tasting.

1003.6(1) Restrictions.

a.The amount of product served per person during a tasting shall be limited to the following:

(1)No more than two one-half-of-one-fluid-ounce tastes of any brand of alcoholic liquor.

(2)No more than two one-fluid-ounce tastes of any brand of wine.

(3)No more than two two-fluid-ounce tastes of any brand of beer.

(4)No more than two two-fluid-ounce tastes of a mixed drink or cocktail as defined in Iowa Code section 123.3.

b.Product shall not be served to, or allowed to be consumed by, any consumer who is under legal age, intoxicated, or simulating intoxication.

c.Product served during a tasting shall not be served by persons under 18 years of age.

d.Product served by an industry member shall be limited to the brands the industry member represents.

1003.6(2) Tastings conducted by an industry member. An industry member may conduct a tasting on licensed and unlicensed premises, subject to the requirements and restrictions provided in this rule.

a.Licensed premises.

(1)A tasting may be conducted on licensed premises where alcoholic beverages are sold or served.

(2)A tasting shall be limited to the types of alcoholic beverages available for purchase as authorized by the license or permit.

(3)A tasting shall be held during the hours in which alcoholic beverages may be legally sold or served.

(4)An industry member may provide snack foods or hors d’oeuvres for the participants at the tasting.

(5)Product or food served during a tasting shall either be provided by the industry member or purchased at no more than the ordinary retail price from the license or permit holder on whose premises the tasting is being held.

(6)Any product or food remaining at the end of a tasting shall be removed from the licensed premises by the industry member.

b.Unlicensed premises.

(1)A tasting of wine or beer may be conducted in an unlicensed public place unless prohibited by Iowa Code section 123.46(2) or an applicable ordinance or regulation of the local authority.

(2)A tasting of alcoholic liquor, wine, or beer may be conducted in an unlicensed private place as defined in Iowa Code section 123.3.

(3)A tasting of alcoholic liquor is prohibited in an unlicensed public place.

(4)Wine and beer served during a tasting shall be obtained from the respective wholesaler.

(5)An industry member may provide snack foods or hors d’oeuvres for the participants at the tasting.

(6)Any product or food remaining at the end of a tasting shall be removed from the premises by the industry member.

1003.6(3) Tastings conducted by a retailer. A retailer licensed or permitted for on- or off-premises consumption may conduct a tasting, subject to the requirements and restrictions provided in this rule.

a.Product served during a tasting shall be served by a retailer, the retailer’s employees or agents, or an industry member who has the explicit consent of the retailer.

b.A tasting shall be limited to the types of alcoholic beverages available for purchase as authorized by the license or permit.

c.A tasting shall be held during the hours in which alcoholic beverages may be legally sold or served.

d.Product served during a tasting shall be legally obtained by the retailer as prescribed by Iowa Code chapter 123.

e.An off-premises license holder may conduct a tasting when there is no charge for product or access.

f.Food may be provided by the retailer for the participants of a tasting.

1003.6(4) Recordkeeping. An industry member shall keep and maintain records in accordance with rule 701—1003.16(123).

This rule is intended to implement Iowa Code section 123.186.

701—1003.7(123) Sampling.

1003.7(1) Conditions. An industry member may give product to a retailer who has not purchased the brand from that industry member within the preceding 12 months.

1003.7(2) Quantity. Product given to a retailer shall not exceed the following amounts within a calendar year.

a.Three liters of any brand of alcoholic liquor.

b.Three liters of any brand of wine.

c.Three gallons of any brand of beer.

1003.7(3) Procurement. An industry member shall obtain alcoholic liquor, wine, or beer used for sampling from the respective wholesaler. If a particular product is not available in a size within the quantity limitations of this section, an industry member may provide to a retailer the next larger size.

1003.7(4) Identification. Each container of product used for sampling shall be clearly marked with the word “SAMPLE”. The marking shall not obscure the label of the container.

1003.7(5) Recordkeeping. An industry member shall keep and maintain records in accordance with rule 701—1003.16(123).

This rule is intended to implement Iowa Code section 123.186.

701—1003.8(123) Trade spending. An industry member may engage in the practice of trade spending.

1003.8(1) Advertising. Trade spending shall be unannounced and unpublicized.

1003.8(2) Quantity. The industry member shall be limited to purchasing one round of alcoholic beverages or nonalcoholic beverages for patrons of an on-premises retailer.

1003.8(3) Payment. The industry member shall pay the retailer no more than the ordinary retail price for the alcoholic beverage or nonalcoholic beverage.

1003.8(4) Recordkeeping. An industry member shall keep and maintain records in accordance with rule 701—1003.16(123).

This rule is intended to implement Iowa Code section 123.186.

701—1003.9(123) Discounts. An industry member is prohibited from refusing to give a retailer a discount that is offered to other retailers in the market area, even though the retailer declines to reduce the price to the consumer during the discount period, or to advertise the industry member’s product during the promotion period.

This rule is intended to implement Iowa Code sections 123.135(4) and 123.180(4).

701—1003.10(123) Combination packaging. An industry member may package and distribute alcoholic liquor, wine, or beer in combination with other nonalcoholic items or products.

1003.10(1) Combination packages shall not have secondary value to the retailer other than having the potential of attracting purchasers and promoting sales.

1003.10(2) Combination packages shall be designed to be delivered intact to the consumer.

1003.10(3) Industry members who sell alcoholic liquor to the department must comply with the department’s policies regarding combination packaging.

This rule is intended to implement Iowa Code section 123.186.

701—1003.11(123) Consumer promotions.

1003.11(1) Coupons. The act by an industry member of furnishing to consumers coupons that are redeemable at a retail establishment does not constitute a means to induce provided the following conditions are met:

a.All retailers within the market where the coupon offer is made may redeem such coupons.

b.An industry member may not reimburse a retailer for more than the face value of all coupons redeemed, plus a usual and customary handling fee for the redemption of coupons.

1003.11(2) Direct offerings. Contest prizes, premium offers, refunds, and like items may be offered by industry members directly to consumers. Officers, employees, and representatives of wholesalers or retailers are excluded from participation.

This rule is intended to implement Iowa Code section 123.186.

701—1003.12(123) Advertising, display or distribution service.

1003.12(1) Prohibition. The act of an industry member paying or crediting a retailer, directly or indirectly, for any advertising, display, or distribution service is prohibited if the act results in exclusion. Such acts include but are not limited to the following:

a.Making payments or credits to retailers that are merely reimbursements, in full or in part, for such services purchased by a retailer from a third party.

b.Directly or indirectly sharing the cost of an advertisement with a retailer.

c.Purchasing advertising from a retailer on such things as but not limited to signs, scoreboards, programs, scorecards, and tote boards in ballparks, stadiums, auditoriums, racetracks, arenas, bowling alleys and all other retail establishments.

d.Purchasing advertising in a retailer publication for distribution to consumers or the general public.

e.Providing reimbursements to retailers for setting up product or other displays.

f.Paying the retailer via a promotion where the industry member rents display space at a retail establishment.

1003.12(2) Exceptions.

a.Newspaper cuts, mats, or engraved blocks for use in retailers’ advertisements may be given or sold by an industry member to a retailer selling the industry member’s products.

b.An industry member may list the names and addresses of two or more unaffiliated retailers selling the products of an industry member in an advertisement of that industry member provided all of the following conditions are met:

(1)The advertisement does not also contain the retail price of the product.

(2)The listing is the only reference to the retailers in the advertisement and is relatively inconspicuous in relation to the advertisement as a whole.

(3)The advertisement does not refer only to one retailer or only to retail establishments controlled directly or indirectly by the same retailer.

This rule is intended to implement Iowa Code sections 123.45 and 123.186.

701—1003.13(123) Stocking and product rotation.

1003.13(1) Allowable activities.

a.An industry member may stock, rotate, and reset alcoholic liquor, wine or beer sold by the industry member.

b.An industry member may affix prices to alcoholic liquor, wine or beer sold by the industry member at the time of delivery, provided that the retailer independently determines the price of the alcoholic liquor, wine and beer.

c.An industry member may build product displays either at the time of delivery or at other times.

d.An industry member may provide a retailer with a recommended shelf plan or shelf schematic for alcoholic liquor, wine, and beer.

1003.13(2) Prohibited activities.

a.An industry member may not reset or rearrange another industry member’s products without the explicit consent of the retailer.

b.An industry member is prohibited from removing another industry member’s point-of-sale advertising matter.

This rule is intended to implement Iowa Code section 123.186.

701—1003.14(123) Sponsorships and special events.

1003.14(1) An industry member may contribute to charitable, civic, religious, fraternal, educational and community entities.

1003.14(2) If such entity is conducting a special event as a retailer or in conjunction with a retailer, an industry member’s contribution shall not induce the retailer, directly or indirectly, to purchase any products from the industry member to the exclusion, in whole or in part, of products sold or offered for sale by other industry members at the special event.

1003.14(3) An industry member shall keep and maintain records in accordance with rule 701—1003.16(123).

This rule is intended to implement Iowa Code sections 123.45 and 123.186.

701—1003.15(123) Participation in educational seminars and retail association activities.

1003.15(1) Educational seminars. An industry member may give or sponsor educational seminars for employees of retailers either at the industry member’s premises or at the retail establishment regarding such topics as use of a retailer’s equipment, training seminars for employees of retailers, and tours of alcoholic beverages manufacturing facilities; however, an industry member is prohibited from paying a retailer’s expenses or compensating a retailer for attending such seminars and tours.

1003.15(2) Retail association activities. An industry member may participate in retail association activities in the following manner:

a.Display its products at a trade show or convention.

b.Rent display booth space provided that the rental fee is not excessive and is the same paid by all exhibitors.

c.Provide hospitality for the persons attending the trade show or convention. The hospitality provided by the industry member shall be independent from association-sponsored activities.

d.Purchase tickets, attend functions, and pay registration fees, provided that such payments are not excessive and are the same paid by all exhibitors.

e.Pay for advertising in programs or brochures issued by retail associations at a convention or trade show, provided that the total payments made by an industry member do not exceed $300 per calendar year to any one retail association.

This rule is intended to implement Iowa Code section 123.186.

701—1003.16(123) Recordkeeping.

1003.16(1) Industry members are required to keep and maintain accurate records for a three-year period regarding each of the items that may be provided to retailers in the following rules:

a.701—1003.2(123) (product displays).

b.701—1003.3(123) (retailer advertising utensils, consumer advertising specialties, and retailer wearing apparel).

c.701—1003.4(123) (glassware).

d.701—1003.6(123) (tasting).

e.701—1003.7(123) (sampling).

f.701—1003.8(123) (trade spending).

g.701—1003.14(123) (sponsorships and special events).

h.701—1003.15(123) (participation in educational seminars and retail association activities).

1003.16(2) Records shall state the following:

a.The name and address of the retailer receiving the item.

b.The date the item was furnished, sold, given, loaned, leased, or rented.

c.The item furnished.

d.The industry member’s laid-in cost of the item furnished.

e.The charges to the retailer for the item.

1003.16(3) Commercial records or invoices may be used to satisfy the requirements of this rule provided all of the required information appears on the record or invoice.

1003.16(4) Records shall be open to representatives of the department during normal business hours of the industry member and may be subject to administrative subpoena issued by the department.

This rule is intended to implement Iowa Code sections 123.33 and 123.186.

The rules in this part specify industry member practices that are a means to induce a retailer and that are prohibited. The rules apply to transactions between industry members and retailers.

701—1003.17(123) Equipment, furnishings, fixtures.

1003.17(1) An industry member is prohibited from directly or indirectly giving, selling, renting, or lending equipment, furnishings or fixtures to a retailer for use by the retailer or in the retail establishment.

1003.17(2) A prohibited indirect inducement includes but is not limited to obtaining equipment, furnishings, or fixtures for a retailer through a third-party arrangement where the resulting benefits flow to an individual retailer.

This rule is intended to implement Iowa Code sections 123.45 and 123.186.

701—1003.18(123) Free warehousing prohibited. An industry member is prohibited, directly or indirectly, from providing free warehousing of products for a retailer by delaying delivery of alcoholic liquor, wine, or beer beyond the time that payment for the product is received or, if a retailer is purchasing on credit, delaying final delivery of products beyond the close of the period of time for which credit is lawfully extended.

This rule is intended to implement Iowa Code sections 123.45 and 123.186.

701—1003.19(123) Extension of credit and prepaid accounts.

1003.19(1) Extension of credit. An industry member is prohibited from extending credit on the sale of alcoholic liquor or beer to a retailer. An industry member may extend credit to a retailer on the sale of wine for not more than 30 days from the date of the sale.

1003.19(2) Prepaid accounts.

a.An industry member may establish prepaid accounts in which retailers deposit a sum of money to pay for future purchases of alcoholic beverages products.

b.An industry member may not hold the money deposited in a prepaid account for future payment of a debt.

c.An industry member shall transfer the amount of the invoice from the retailer’s prepaid account each time that the industry member makes a sale and a delivery to the retail establishment.

d.An industry member is not required to establish separate escrow accounts for prepaid accounts.

e.An industry member is responsible for accurately and honestly accounting for the funds held in a prepaid account.

f.A retailer may withdraw the money placed in a prepaid account at any time.

g.An industry member is prohibited from utilizing prepaid accounts to require a retailer to purchase any quota of alcoholic liquor, wine, or beer.

This rule is intended to implement Iowa Code sections 123.45 and 123.181(2).

701—1003.20(123) Quota sales. An industry member is prohibited from requiring a retailer to purchase and sell any quota of alcoholic liquor, wine or beer.

This rule is intended to implement Iowa Code sections 123.45 and 123.186.

701—1003.21(123) Tie-in sales. An industry member is prohibited from requiring a retailer to purchase one product in order to purchase another. This prohibition includes combination sales if one or more products may be purchased only in combination with other products and not individually. However, an industry member is not prohibited from selling at a special combination price, two or more kinds or brands of products to a retailer, provided that the retailer has the option of purchasing either product at the usual price, and the retailer is not required to purchase any product not wanted by the retailer.

This rule is intended to implement Iowa Code sections 123.45 and 123.186.

The rule in this part specifies that exclusive outlet arrangements with retailers are prohibited. The rule applies to transactions between industry members and retailers.

701—1003.22(123) Contracts to purchase alcoholic liquor, wine, or beer.

1003.22(1) Implied or express contracts.

a.Any contract or agreement, written or unwritten, that has the effect of requiring the retailer to purchase alcoholic liquor, wine, or beer from the industry member beyond a single sales transaction is prohibited, except as provided in paragraph 1003.22(1)“b.” Examples of such contracts are:

(1)An advertising contract between an industry member and a retailer with the express or implied requirement of the purchase of the advertiser’s products.

(2)A sales contract awarded on a competitive bid basis that has the effect of prohibiting the retailer from purchasing from other industry members by requiring that, for the period of the agreement, the retailer purchase a product or line of products exclusively from the industry member or requiring that the retailer purchase a specific or minimum quantity during the period of the agreement.

b.An industry member and a retailer may enter into a supply contract for one year or less under which the industry member agrees to sell alcoholic liquor, wine, or beer to the retailer on an “as needed” basis provided that the retailer is not required to purchase any minimum quantity of such product.

1003.22(2) Third-party arrangements.

a.Industry member requirements, by agreement or otherwise, with nonretailers that result in a retailer’s being required to purchase the industry member’s products are prohibited, regardless of whether the agreement or other arrangement originates with the industry member or the third party.

EXAMPLE: A supplier enters into a contractual agreement or other arrangement with a third party. This agreement or arrangement contains an industry member requirement as described above. The third party—a ballclub or municipal or private corporation not acting as retailer—leases the concession rights and is able to control the purchasing decisions of the retailer. The third party, as a result of the requirement, by agreement or otherwise, with the industry member, requires the retailer to purchase the industry member’s products to the exclusion, in whole or in part, of products sold or offered for sale by other industry members.

b.Prohibited business arrangements between an industry member and a third party may consist of such things as sponsoring radio or television broadcasting, paying for advertising, or providing other services or things of value.

This rule is intended to implement Iowa Code sections 123.45 and 123.186.

The rule in this part specifies industry member practices that are a means to induce a retailer and that are prohibited. The rule applies to transactions between industry members and employees, officers, or representatives of retailers.

701—1003.23(123) Commercial bribery. An industry member is prohibited from offering or giving a retailer free trips, bonuses or prizes based on sales of the industry member’s alcoholic beverages products.

This rule is intended to implement Iowa Code section 123.186.

The rules in this part specify sales arrangements that are prohibited. The rules apply to transactions between industry members and trade buyers.

701—1003.24(123) Consignment sales. An industry member is prohibited from selling alcoholic liquor, wine, or beer to a retailer on consignment. Consignment means a sale under which the retailer is not obligated to pay for the alcoholic liquor, wine, or beer, until the product is sold by the retailer.

This rule is intended to implement Iowa Code section 123.186.

701—1003.25(123) Return of alcoholic liquor, wine, and beer. An industry member may accept the return of alcoholic liquor, wine, and beer for ordinary and usual commercial reasons but is not obligated to do so.

1003.25(1) Ordinary and usual commercial reasons for exchanges and returns.

a.Defective products.

(1)Products that are unmarketable because of product deterioration, leaking containers, damaged labels, or missing or mutilated tamper-evident closures may be exchanged for an equal quantity of identical products or may be returned for cash or credit against outstanding indebtedness.

(2)Freshness dating. An industry member may accept a return of beer for cash or credit against outstanding indebtedness or exchange the beer for freshness reasons provided all of the following conditions are met:

1.The manufacturer of the beer has policies and procedures in place that specify the date the retailer must pull the product.

2.The industry member’s freshness return/exchange policies and procedures are readily verifiable and consistently followed by the industry member.

3.The beer container has identifying markings that correspond with the pull date.

4.The beer product pulled by the trade buyer may not reenter the retail marketplace.

b.Error in products delivered. Any discrepancy between products ordered and products delivered may be corrected, within a reasonable period after delivery, by exchange of the products delivered for those that were ordered, or by a return for cash or credit against outstanding indebtedness.

c.Products that may no longer be lawfully sold. Products that may no longer be lawfully sold may be returned for cash or credit against outstanding indebtedness. This would include situations where, due to a change in regulation or administrative procedure over which the trade buyer or an affiliate of the trade buyer has no control, a particular size or brand is no longer permitted to be sold.

d.Termination of business. Products on hand at the time a trade buyer terminates operations via cancellation of the trade buyer’s license or permit may be returned for cash or credit against outstanding indebtedness. This does not include the temporary seasonal shutdown of a trade buyer holding a 12-month license or permit.

e.Termination of franchise. When an industry member has sold products for cash or credit to one of its wholesalers and the distributorship arrangement is subsequently terminated, stocks of the product on hand may be returned for cash or credit against outstanding indebtedness.

f.Change in product. Except as provided in paragraph 1003.25(2)“b,” a trade buyer’s inventory of a product that has been changed in formula, proof, label, or container may be exchanged for equal quantities of the new version of that product.

g.Discontinued products. When a producer or importer discontinues the production or importation of a product, a trade buyer’s inventory of that product may be returned for cash or credit against outstanding indebtedness.

h.Seasonal dealers. Industry members may accept the return of products from retailers holding an eight-month seasonal license or permit upon cancellation of the license or permit. These returns shall be for cash or for credit against outstanding indebtedness.

1003.25(2) Reasons not considered ordinary and usual. The following are not considered ordinary and usual commercial reasons for exchanges and returns. Exchanges and returns for these reasons are prohibited.

a.Overstocked or slow-moving products.

b.Products for which there is only a limited or seasonal demand.

This rule is intended to implement Iowa Code section 123.186.

The rule in this part governs violations of rules within this chapter.

701—1003.26(123) Contested case—burden. In any contested case alleging a violation of this chapter, the burden of demonstrating compliance with the lawful requirements for retention of the license or permit or certificate of compliance shall be placed on the licensee, permittee, or certificate of compliance holder.

This rule is intended to implement Iowa Code sections 17A.18(3) and 123.39.