New York: Heineken Fined for Trade Violations
The New York State Liquor Authority (SLA) finalized a $1.25 million settlement agreement with Heineken USA Incorporated (HUSA) for 42 violations of the state’s Alcoholic Beverage Control (ABC) law.
This fine comes just 3 months after Heineken USA agreed to pay the largest offer in compromise ever — $2.5 million — to the Alcohol and Tobacco Tax and Trade Bureau (TTB) for trade practice violations related to its proprietary “BrewLock” draft systems.
The BrewLock systems, according to both the SLA and TTB, are designed to only dispense Heineken products packaged in unique kegs, which subsequently induced retailers to purchase more products made by the global beer giant.
TTB accused Heineken USA of the following:
- Violations of the Federal Alcohol Administration (FAA) Act, specifically subsection 205 “unfair competition and unlawful practices,” in Florida and later Washington state and New York City between August 1, 2015, and March 26, 2019.
- Reimbursing retailers for purchasing on-premise technology through disguised credit card transactions.
- Making slotting fee payments to retailers, which were disguised as “permissible activities” such as consumer sampling experiences that never took place.
The federal investigation sparked the New York investigation as TTB informed SLA of Heineken’s trade malpractices.
SLA investigations uncovered the following:
- Heineken USA gave away more than 800 BrewLock systems, valued at about $500 each, from 2014 to 2015.
- Heineken attempted to conceal transactions involving its “Blade” kegerator device by using a third-party, Micro Matic, to incentivize retailers.
On June 10, 2019 the SLA charged Heineken USA with 42 violations of New York’s ABC law, including 32 counts of providing illegal gifts and services and 10 counts of failure to maintain adequate books and records.
Heineken USA while acknowledging the settlement agreement does not admit they are at fault. However, the BrewLock program has since been discontinued in New York.