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  The ILCC Legal Division

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TPP-25:
Stocking, Rotating and Re-Setting of Products

I. Purpose

This Policy statement defines procedures regarding manufacturers and distributors stocking, rotating and re-setting their products at retail establishments.

II. Policy

It is the policy of this Commission that manufacturers and distributors may stock and rotate their product at retail establishments as long as such activities are done in conjunction with and incidental to delivery of such product in the normal course of business or at the time of a sales call to the retailer. However, such services must be done voluntarily by the manufacturer, distributor and importing distributor, and may not be required to be performed by the retailer. This policy allows distributors to take part in retailer prompted resets up to four times per year, as long as all distributors are notified of the reset. This policy prohibits manufacturers and distributors from acting as the employee of the retailer, from pricing the retailer’s products and, generally, from handling any other supplier’s products.

III. Background

Pursuant to 235 ILCS 5/6-5, it is illegal “for any person having a retailer’s license or any officer, associate, member, representative or agent of such licensee to accept or receive...anything...of value...directly or indirectly from any manufacturer, importing distributor or distributor of alcoholic liquor.” Similarly, 235 ILCS 5/6-5 makes it “unlawful for any manufacturer or distributor or importing distributor to give or lend...anything...of value...directly or indirectly to any retail licensee or to the manager, representative, agent, officer or director of such licensee”. Thus, distributors and manufacturers may not give or lend anything of value to retailers, and retailers may not accept or receive anything of value from distributors or manufacturers.

Pursuant to Policy TPP-1: “Of-Value Standards”, this Commission will determinate on a case-by-case basis whether services may be provided by manufacturer and distributors to retailers. Unless such services are specifically allowed under statute, regulation or trade practice policy, services provided by manufacturers, distributors and importing distributors to retailers will be presumed to be in violation of the “of value” provisions of 235 ILCS 5/6-5.

IV. Procedures

This policy defines the limits on what manufacturers and distributors may legally do for retailers and not risk Commission intervention.

A. General

Under no circumstances may manufacturers, distributors and importing
distributors affix prices to product on behalf of retailers. They may not clean or dust shelves, coolers, or products which are on display at the retailer’s location. Generally, they may not touch, move, alter, or disturb the product of a competitor.

Employees of manufacturers, distributors and importing distributors may not be treated as employees of retailers, nor may they work free of charge to the retailer.

B. Stocking

At their discretion, manufacturers, distributors and importing distributors may stock only their own products at a retail establishment. This shall be done during the course of the regular sales call or delivery to the retailer, however, such services must be done voluntarily by the manufacturer, distributor and importing distributor, and may not be required to be performed by the retailer. Nothing in this Trade Practice Policy shall prohibit the exchange of product that is near the manufacturer’s expiration or ‘code’ date. If stocking is performed with any greater frequency, it will be viewed as more than minimal provision of free labor to the retailer. Stocking is defined as any placing of product where it is to be stored or offered for sale on a retailer’s premises (e.g. on shelves, in coolers, against walls, in displays or in storage areas). Manufacturers, distributors and importing distributors may place product at any of the aforementioned locations on the theory that stocking is a service incidental to a sales call or a delivery in the ordinary course of business.

However, with respect to special promotions and displays constructed in connection therewith, manufacturers, distributors and importing distributors may assemble or construct displays for retailers, may place or position the display at the retail premises, and may stock or replenish the display at any time during the course of the special promotion. In this circumstance there is no“normal sales call or delivery” limitation as it is often necessary to perform such service on a daily basis.

C. Rotation

At their discretion, manufacturers, distributors and importing distributors may rotate only their own products at a retail establishment, during the normal course of a sales call or a delivery. In the beer industry this practice is required to ensure compliance with freshness dates. However, such services must be done voluntarily by thed istributor, and may not be required to be performed by the retailer. This shall be done during the normal course of a sales call or a delivery, and if done with any greater frequency, it will be viewed as more than minimal provision of free labor to the retailer. Rotation shall include the moving of newer, fresher product from a storage area to an area where it is offered for sale. Permissible rotation also includes the moving of older product to the front of a point-of-sale location and replenishing of the location with fresh product. Rotation may be performed at any location in the retail premises. Manufacturers, distributors and importing distributors may rotate product on the theory that such rotation is a service incidental to the sales call or delivery of product in the ordinary course of business. However, with respect to special promotions and displays constructed in connection therewith, manufacturers and distributors may assemble or construct the display for retailers, may place or position the display at the retail premises, and may stock or replenish the display at any time. In this circumstance there is no“normal sales call or delivery” limitation as it is often necessary to perform such service on a daily basis. Note that the cost of the display must be in compliance with the dollar limitation provisions of 235 ILCS 5/6-6.

D. Resetting

Manufacturers, distributors and importing distributors are permitted to participate in resets conducted at retail establishments no more than four (4) times per calendar year per licensed premises. Resets called by retailers more often than four (4) times a year will be considered to be an unfair burden on the provider of the goods to the retailers.

Whether initiated by the manufacturer, distributor, importing distributor or retailer, where a reset is called it shall be the duty of the retailer to notify in writing all affected manufacturers, distributors and importing distributors of the reset no less than two (2) weeks prior to the date scheduled for the reset. The retailer must make all reasonable efforts to schedule the reset for a time most convenient for the majority of manufacturers, distributors and importing distributors involved. During the reset, participants are limited to the movement of their own goods only, unless another supplier which has been properly notified is not attending. In such case, the participants may assist the retailer in moving the goods of the non-attending supplier. The point is that the retailer can reset the product, on his own, whenever he wants, and a distributor can reset its product so long as it does not touch a competitor’s.

Manufacturers, distributors and importing distributors may provide diagrams to retailers, which suggest the most beneficial location within the store for the presentation and sale of product to the consumer. If the retailer decides to follow the location suggestion, manufacturers, distributors and importing distributors may reset only their product within the store in accordance with the diagrams, or any modifications thereof, and a formal reset date in not required to be arranged. However, in this circumstance, the party performing the reset may move only its product.

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