Illinois Liquor Control Commission Legal Division
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The ILCC Legal Division

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TPP-15:
Geographic Territories

I.   Purpose

To set the policy of the Illinois Liquor Control Commission and establish the guidelines which shall control the relationship between Manufacturers and Distributors in the following areas:

A. Geographic Territories
B. Registration of Brands
C. Sales Outside of Geographic Territory
D. Sub-distributor Exception
E. Withdrawal of Registered Distributor
F. Registration of Products and Distributors
G. “Secondary” alcohol marketplace

II. Policy

It is the policy of this Commission that manufacturers shall designate distributors for the sale and distribution of their brands within specified geographic territories, and that retail licensees must purchase alcoholic beverages from distributors authorized to sell in such designated geographic territories. Distributors shall regularly service all retail licensees within their geographic territories without prejudice in accordance with State statute (235 ILCS 5/6-17.1); and shall make available to all retail licensees any products for which they have distribution rights.

III. Background, Statutes, Regulations

235 ILCS 5/6-9 of the Liquor Control Act (235 ILCS 5/1, et seq.) and 815 ILCS 720/5(8) of the Beer Industry Fair Dealing Act (815 ILCS 720/1, et seq.) provide the guidelines for the sale of alcoholic liquors within geographic territories.

Section 100.60 of the Rules and Regulations of the ILCC also apply. 815 ILCS 720/3 and 4 provide the guidelines for cancelling an agreement between the brewer and the wholesaler-distributor.

For the purposes of this policy, a “manufacturer” shall include any manufacturer, importing distributor, distributor, non-resident dealer or foreign importer who owns or controls a trade mark, brand or name of alcoholic liquor.

IV. Procedures

A. Restricted Geographic Territories

Each manufacturer shall designate a distributor(s) for the sale of its product(s) to retailers within a designated geographic territory (235 ILCS 5/5-1(a-1) and 5/6-9).

  1. The manufacturer of an alcoholic product other than beer may designate more than one distributor within a geographic territory (235 ILCS 5/6-9).
  2. A beer manufacturer may designate only one distributor within a geographic territory (815 ILCS 720/5(8)).

B. Registration of Brands

  1. Every manufacturer must register the name of each distributor to whom such manufacturer has granted the right to sell its product with the ILCC (235 ILCS 5/6-9).
  2. The registration statement must specify:
    1. the particular brands of alcoholic liquor each distributor has been granted;
    2. the geographical area for which such right is granted; and
    3. the period of time for which such right is granted.
  3. Such registration shall be made only by the person who owns or controls the trademark, brand or name of any alcoholic liquor [Section 100.60(b)].
  4. Such registration shall be fulfilled by submitting the form to the Commission [235 ILCS 5/5-1(a-1)].

C. No Sales Outside of Geographic Territory

  1. A distributor may not sell alcoholic liquor outside its designated geographic territory. Nor may a distributor sell alcoholic liquor to a retail licensee whose premises are located outside of such geographic territory (235 ILCS 5/6-9).
  2. A retailer may not purchase alcoholic liquor from a distributor who does not bear distributing rights in the geographic territory in which the retailer’s place of business is situated [Section 100.60(d)].

D. Sub-distributor Exception

In 1979, the narrow “Sub-distributor” exception to 235 ILCS 5/6-9 has been carved out for certain distributors who qualify as “sub-distributors.” These sub-distributors, to whom the manufacturer has not granted the right to sell a brand of alcoholic liquor, may nevertheless purchase such brand from a duly appointed distributor and sell at wholesale. However, the following restrictions apply:

  1. The sub-distributor must be a licensed Illinois distributor who has been engaged in the purchase of a brand for resale for a period of two years prior to November 8, 1979;
  2. The sub-distributor must properly notify the Commission in writing of the brands it wishes to purchase and resell;
  3. The sub-distributor’s business address must be within the geographical area of his distributor; and
  4. The sub-distributor may only make sales within the geographical area of its distributor.

This subsection was amended in 1998 to add language which mandated that the sub-distributor sales could only be made to retail licensees whose licensed premises were located within the geographical area for which the licensed Illinois distributor from whom the sub-distributor purchased were made. And the 1998 amendment also added to the paragraph following the above, that any licensed Illinois distributor who had not been granted the right to sell any alcoholic liquor at wholesale and was purchasing a­lcoholic liquor from a person who had been granted the right to sell at wholesale may sell and deliver only to retail licensees whose licensed premises were within the same geographical area as the person who had been granted the right to sell at wholesale.

E. Withdrawal of Registered Distributor

1. Beer

  1. When a brewer terminates an agreement granting a wholesaler the right to sell a particular brand, that brewer must file a “Withdrawal of Registration” form with the ILCC. A copy of this “Withdrawal of Registration” shall be sent registered or certified mail to all those listed thereon to serve as notice of the contents (Reg. 100.60).
  2. A brewer may terminate an agreement without furnishing any prior notification for the following reasons: i) Wholesaler’s failure to pay any account when due, upon demand by the brewer for such payment, in accordance with agreed payment terms. ii) Wholesaler’s assignment for the benefit of creditors, or similar disposition, of substantially all of the assets of such party’s business. iii) Insolvency of wholesaler, or the institution of voluntary or involuntary proceedings in bankruptcy involving the wholesaler. iv) Dissolution or liquidation of the wholesaler. v) Any attempted transfer of business assets, voting stock
  3. For all other reasons, the brewer or wholesaler must provide written notice not less than ninety (90) days prior to the date upon which a termination of any such agreement is sought. The notice shall contain the following: i) a statement of intention to cancel, refusal to renew, or termination for other specified reasons; ii) a complete statement of reasons, including all data and documentation necessary to apprise the wholesaler of the reasons for the action; and iii) the date on which the action shall take effect [815 ILCS 720/3(2)].
  4. The brewer and wholesaler must make reasonable good faith efforts to resolve any disagreements. If, within 90 days after receiving notification of an intent to terminate, the affected party rectifies or otherwise eliminates the specified cause of the disagreement, the party serving notice to cancel, refusal to renew, or otherwise terminate, may not do so (815 ILCS 720/4).

2. Alcoholic Liquors Other Than Beer

  1. There is no 90 day notification provision governing the termination of an agreement between a manufacturer and a distributor for the sale and distribution of alcoholic liquors other than beer.
  2. However, upon termination of an agreement, the manufacturer must file a“Withdrawal of Registration” form.
  3. The party terminating the agreement shall send via certified or registered mail a copy of the “Withdrawal of Registration” to all those listed thereon to serve as notice of the contents.
  4. Since such terminations involve private, contractual disputes, the Commission does not become involved in same, other than in response to a petition filed by the party owning the brand name, trademark, etc. to direct the terminated distributor to cease distribution of the subject products.

F. Registration of Products and Distributors

It has come to the attention of the Commission that certain licensees responsible for the registration of distributors/importing distributors/foreign importers (wholesalers) and products in the State of Illinois have failed to comply with one or more of the Illinois statutory and regulatory requirements.

Wholesaler/product registrations may be filed with the Commission at any time, but must be received by the Commission before the particular wholesaler(s) can initiate product sales. to assist in such filing the Commission has added both the Registration Statement and the Withdrawal of Registration (in PDF format) to its website (Only original documents with necessary information and authorized signatures will be filed. Duplicate copies will be file stamped and returned, if requested. The failure of any responsible licensees to act in conformity with the statute and rule may subject such licensees to disciplinary action.

See also, P.A. 92-0105 which provides that Foreign Importers are subject to all the filing requirements of Sec. 5/6-9, and that wholesalers may file“substitute” registration statements in the event they are not provided copies by the party filing same with the Commission.

Sec. 5/5-1
(k) A foreign importer's license shall permit such licensee to purchase alcoholic liquor from Illinois licensed non‑resident dealers only, and to import alcoholic liquor other than in bulk from any point outside the United States and to sell such alcoholic liquor to Illinois licensed importing distributors and to no one else in Illinois; provided that the foreign importer registers with the State Commission every brand of alcoholic liquor that it proposes to sell to Illinois licensees during the license period and provided further that the foreign importer complies with all of the provisions of Section 6-9 of this Act with respect to registration of such Illinois licensees as may be granted the right to sell such brands at wholesale.

Sec. 6-9
Each manufacturer, non-resident dealer, distributor or importing distributor, or foreign importer who is required to register under this Section must furnish a copy of the registration statement at the time of appointment to the person who has been granted the right to sell alcoholic liquor at wholesale. However, if a person who has been appointed the right to sell alcoholic liquor at wholesale does not receive a copy of the registration statement as required under this Section, such person may file a registration statement with the State Commission, provided that the person furnishes a copy of that registration statement to the manufacturer, non-resident dealer, distributor, importing distributor, or foreign importer within 30 days of filing the registration statement.

The registration statement shall state:

  1. the name of the person appointed;
  2. the name of the manufacturer, non‑resident dealer, distributor, importing distributor, or foreign importer from whom the person received the right to sell alcoholic liquor;
  3. the particular trade mark, brand, or name of alcoholic liquor as to which the right to sell at wholesale is granted; and
  4. the geographical areas for which the right to sell at wholesale is granted.

In every instance in which an Illinois distributor seeks to file a registration statement under P.A.-0105, the party seeking such filing shall provide the Commission written documentation evidencing that party’s right to make such a filing, including but not limited to copies of contracts between the distributor authority, or other authoritative documentation. Any party seeking to file such registration statement without a legal basis for same shall be subject to discipline for such violation.

G. “Secondary” Alcohol Marketplace

The “secondary” alcohol marketplace concerns the acquisition of usually rare, or “vintage,” alcoholic beverages from sources such as estates, auctions, wholesaler stock, foreign producers and the like, which beverages have traveled through the three-tier system prior to the time of such acquisition, all applicable taxes having been properly collected and remitted. These products, usually wines, but both malt beverages and distilled spirits may also be subject to such acquisition, have been acquired by a licensee, usually a non-resident dealer, who seeks to reintroduce the product into the stream of commerce.

Where such rare or vintage alcoholic beverages are acquired by a licensed non-resident dealer, and the original producer of such products has not filed a written objection with the Commission, the non-resident dealer may register the product and appoint licensed Illinois wholesalers to distribute the product, as may be provided by law.

The non-resident dealer, prior to any sale of such product to any Illinois wholesaler shall file with the Commission a Registration Statement, substantially following the form which follows this policy. Any change in the appointment of Illinois wholesaler to handle these products will be accomplished as provided in Sec. 5/6-9, with a “Withdrawal of Registration” and the filing of a new registration form.

The filing of a Registration Statement shall initiate the process, which shall be reviewed on a case-by-case basis by the Commission to determine the propriety of the request for registration.


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