The Alcohol and Tobacco Tax and Trade Bureau (TTB) recently investigated a Texas distillery’s sponsorship agreements, which led to the unlawful exclusion of products from their competitors. As a result, the distillery paid a $305,000 Offer in Compromise (OIC) to the TTB.
Violations of the Federal Alcohol Administration Act
Fifth Generation, Inc., allegedly violated the trade practice prohibitions of the Federal Alcohol Administration Act. Over a five-year period ending in 2021, the Austin, Texas-based company entered into sponsorship agreements with sports and entertainment venues which promoted the retail concessionaires at the venues to purchase Fifth Generation’s distilled spirits. This in turn suppressed the products of Fifth Generation’s competitors.
What is an Offer in Compromise?
As a result of the investigation, the TTB recently accepted the $305,000 OIC. Rule breaches, such as this one, can lead the TTB to pursue civil or even criminal litigation. Yet, it is often simpler for all involved parties to settle matters out of court.
An Offer in Compromise allows businesses to continue on with minimal disruption resulting from the investigation. The TTB will generally consider OICs for violations it administers. The alternatives to an OIC are that the TTB can either suspend an industry member’s permit or the industry member can voluntarily surrender their permit, instead of facing administrative action. Both alternatives could leave your company unable to operate.
Stopping anti-competitive practices
The TTB conducts regular investigations ensuring compliance from industry members, including to put a stop to anti-competitive practices that ultimately prevent consumers from choosing from a wide array of products. An alcoholic beverage law attorney can help you and your business remain in compliance with relevant laws and regulations.