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Discriminatory Trade Practices By Wholesalers and Retailers Results in Over $10 Million in Fines to NJ ABC

New Jersey Attorney General, Gurbir S. Grewal, and the Division of Alcoholic Beverage Control (“ABC”) recently announced that New Jersey’s two largest wine and spirits wholesalers will pay $4 million each to resolve findings that they engaged in discriminatory trade practices that unfairly favored their largest retail customers. In addition, twenty retailers statewide will pay a total of $2.3 million for their part in the unlawful scheme.

Fedway Associates and Allied Beverage Group Pay Four (4) Million Dollars Each in Fines to NJ Division of Alcoholic Beverage Control

In separate Consent Orders with ABC, wholesalers Allied Beverage Group and Fedway Associates agreed to pay record-high monetary penalties and change their business practices to resolve trade violations uncovered during a sweeping two-year investigation by ABC’s Enforcement and Investigations Bureaus.

The investigation found that the wholesalers – which together account for approximately 70% of all wine and 80% of all spirits sold at wholesale in the State – unfairly favored 20 of the State’s largest wine and spirits retailers and put smaller retailers at a competitive disadvantage by manipulating the retailer incentive program (RIP), granting credit extensions and interest-free loans, and engaging in other discriminatory practices.

The monetary payments from Allied and Fedway are the largest in ABC’s history, and in addition, both entities each agreed to adopt a corrective action plan; employ a compliance monitor for two years; make upgrades to their computer systems; and facilitate the retirement, resignation and/or termination of certain employees.

What are Retail Incentive Programs (RIPs)

The RIPs provide cash rebates payed to retailers by wholesalers for purchasing certain quantities of alcoholic beverages. ABC regulations control the program by making RIPs available to all retailers on a non-discriminatory basis, by keeping the RIP payments to retailers relatively small, and by not allowing wholesalers to substitute RIPs for interest-free loans.

What Penalties Did the ABC Impose on Retail Licensees for ABC Violations?

Below is a list of the various retail licenees who were allegedly benefiting from the Discriminatory Trade Practices offered by Fedway and Allied:

70 Wine and Spirits, LLC, t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

Ashburn Corp., t/a Roger Wilco: $200,000 monetary offer in compromise in lieu of suspension plus corrective action.

Birchfield Ventures, Inc., t/a Joe Canal’s Discount Liquor Market (Woodbridge): $90,000 monetary offer in compromise in lieu of suspension.

Birchfield Ventures, Inc. t/a Joe Canal’s Discount Liquor Outlet (Lawrenceville): $160,000 monetary offer compromise in lieu of suspension.

Bernardsville Wine Company, LLC t/a Gary’s Wine & Marketplace: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

BLW World, Inc., t/a Liquor World of Fort Lee: $110,000 monetary offer in compromise in lieu of suspension.

Closter Wine and Spirits t/a Gary’s Wine & Marketplace: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

Ecclipse LLC, t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

The Hudson Wine Market t/a Hudson Wine Market: $90,000 monetary offer in compromise in lieu of suspension.

Jelma, Inc., t/a Gary’s Wine & Marketplace: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

Leiham Corp., t/a Bayway World of Liquors: $375,000 monetary offer in compromise in lieu of suspension plus phased-in retirement of manager and other corrective action.

Meritage Wine Cellars LLC, t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

MM Wine & Spirits Inc., t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

Richard McAdam, Inc., t/a Stirling World of Liquor and Stirling Fine Wines: $110,000 monetary offer in compromise in lieu of suspension.

Somerset Wine Company, LLC, t/a Gary’s Wine & Marketplace: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

SVGI, Inc., t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

SVGS Inc., t/a Vingo Wine and Spirits: $90,000 (including $62,500 unaccounted for cash seized from the store) monetary offer in compromise in lieu of suspension plus corrective action.

Vinvigo, LLC, t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

VSGI LLC, t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

Vive Naini, LLC, t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

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