98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
SB3284

 

Introduced 2/14/2014, by Sen. Thomas Cullerton

 

SYNOPSIS AS INTRODUCED:
 
815 ILCS 720/7  from Ch. 43, par. 307

    Amends provisions of the Beer Industry Fair Dealing Act setting forth conditions under which a brewer shall pay reasonable compensation to a wholesaler if a brewer cancels, terminates, or fails to renew an agreement or unlawfully denies approval of, or unreasonably withholds consent to, an assignment, transfer, or sale of a wholesaler's business assets or voting stock or other equity securities, the brewer elects expedited binding arbitration, the wholesaler rejects the offer to arbitrate, and other conditions exist. Provides that a brewer shall, in good faith, make a payment of reasonable compensation to the wholesaler if the wholesaler retains a brand for 6 months (rather than 2 years) after the wholesaler rejects the offer to arbitrate and other conditions are met. Effective immediately.


LRB098 17574 JLS 52684 b

 

 

A BILL FOR

 

SB3284LRB098 17574 JLS 52684 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Beer Industry Fair Dealing Act is amended by
5changing Section 7 as follows:
 
6    (815 ILCS 720/7)  (from Ch. 43, par. 307)
7    Sec. 7. Reasonable compensation.
8    (1) Subject to the right of any party to an agreement to
9pursue any remedy provided in Section 9, any brewer that
10cancels, terminates or fails to renew any agreement, or
11unlawfully denies approval of, or unreasonably withholds
12consent, to any assignment, transfer or sale of a wholesaler's
13business assets or voting stock or other equity securities,
14except as provided in this Act, shall pay the wholesaler with
15which it has an agreement pursuant to this Act reasonable
16compensation for the fair market value of the wholesaler's
17business with relation to the affected brand or brands. The
18fair market value of the wholesaler's business shall include,
19but not be limited to, its goodwill, if any.
20    (1.5) The provisions of this subsection (1.5) shall only
21apply if the brewer agrees to pay reasonable compensation as
22defined in subsection (1) and the total annual volume of all
23beer products supplied by a brewer to a wholesaler pursuant to

 

 

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1agreements between such brewer and wholesaler represents 10% or
2less of the total annual volume of the wholesaler's business
3for all beer products supplied by all brewers. For purposes of
4this subsection (1.5) only, "annual volume" means the volume of
5beer products sold by the wholesaler in the 12-month period
6immediately preceding receipt of the brewer's written offer
7pursuant to this subsection (1.5).
8    If a brewer is required to pay reasonable compensation as
9described in subsection (1) and the question of reasonable
10compensation is the only issue between the parties, the brewer
11shall, in good faith, make a written offer to pay reasonable
12compensation. The wholesaler shall have 30 days from receipt of
13the written offer to accept or reject the brewer's offer.
14Failure to respond, in writing, to the written offer shall
15constitute rejection of the offer to pay reasonable
16compensation. If the wholesaler, in writing, accepts the
17written offer, the wholesaler shall surrender the affected
18brand or brands to the brewer at the time payment is received
19from the brewer. If the wholesaler does not, in writing, accept
20the brewer's written offer, either party may elect to submit
21the determination of reasonable compensation to expedited
22binding arbitration. If one party notifies the other party in
23writing that it elects expedited binding arbitration, the other
24party has 10 days from receipt of the notification to elect
25expedited binding arbitration or to reject the arbitration in
26writing. Failure to elect arbitration shall constitute

 

 

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1rejection of the offer to arbitrate.
2        (A) If the parties agree to expedited binding
3    arbitration, the arbitration shall be subject to the
4    expedited process under the commercial rules of the
5    American Arbitration Association. The arbitration shall be
6    concluded within 90 days after the parties agree to
7    expedited binding arbitration under this Section, unless
8    extended by the arbitrator or one of the parties. The
9    wholesaler shall retain the affected brand or brands during
10    the period of arbitration, at the conclusion of which the
11    wholesaler shall surrender the affected brand or brands to
12    the brewer upon payment of the amount determined to be
13    reasonable compensation, provided the wholesaler shall
14    transfer the affected brand or brands to the brewer after
15    90 days if the arbitration proceedings are extended beyond
16    the 90 day limit at the request of the wholesaler.
17    Arbitration costs shall be paid one-half by the wholesaler
18    and one-half by the brewer. The award of the arbitrator
19    shall be final and binding on the parties.
20        (B) If the brewer elects expedited binding arbitration
21    but the wholesaler rejects the offer to arbitrate:
22            (i) The wholesaler may accept, in writing, any
23        written offer previously made by the brewer. If the
24        wholesaler selects this option, the wholesaler must
25        surrender the affected brand or brands to the brewer at
26        the time payment is received. If the wholesaler

 

 

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1        believes that the amount paid by the brewer is less
2        than reasonable compensation under subsection (1), the
3        wholesaler may bring a proceeding under subsection (2)
4        for the difference, but may not proceed under
5        subsection (3) of Section 9; or
6            (ii) The wholesaler may proceed against the brewer
7        under Section 9, provided the wholesaler must
8        surrender the affected brand or brands to the brewer if
9        a proceeding under Section 9 has not been initiated
10        within 90 days after the wholesaler rejects the offer
11        to arbitrate. Upon determination of reasonable
12        compensation pursuant to Section 9, the brewer shall
13        pay the wholesaler the amount so determined. Until
14        receiving payment from the brewer of the amount so
15        determined, the wholesaler shall retain the affected
16        brand or brands. If (a) the wholesaler retains the
17        affected brand or brands for a period of 6 months 2
18        years after the wholesaler rejects the offer to
19        arbitrate, (b) the amount of reasonable compensation
20        has not been determined, and (c) an injunction has not
21        been issued, the brewer shall, in good faith, make a
22        payment of reasonable compensation to the wholesaler.
23        If, however, the brewer fails to ship or make available
24        brands ordered by the wholesaler prior to the brewer
25        making any payment (including a good faith payment as
26        provided in this subsection) to the wholesaler, the

 

 

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1        wholesaler shall be entitled to injunctive relief and
2        attorneys' fees and shall subject the brewer to
3        punitive damages. Upon receipt of this payment, the
4        wholesaler must surrender the affected brand or brands
5        to the brewer, provided that such surrender shall not
6        affect the brewer's obligation to pay all amounts
7        ultimately determined due to the wholesaler under this
8        Act.
9        (C) If the wholesaler elects expedited binding
10    arbitration but the brewer rejects, the brewer may proceed
11    under Section 9 for the purpose of determining reasonable
12    compensation. Upon determination of reasonable
13    compensation pursuant to Section 9, the brewer shall pay
14    the wholesaler the amount so determined. Until receiving
15    payment from the brewer of the amount so determined, the
16    wholesaler shall retain the affected brand or brands. If
17    (a) the brewer initiates a proceeding under Section 9
18    within 90 days after the wholesaler rejects the offer to
19    arbitrate, (b) the wholesaler retains the affected brand or
20    brands for a period of 6 months 2 years from the date the
21    wholesaler rejects the offer to arbitrate, (c) the amount
22    of reasonable compensation has not been determined, and (d)
23    an injunction has not been issued, the brewer shall, in
24    good faith, make a payment of reasonable compensation to
25    the wholesaler. If, however, the brewer fails to ship or
26    make available brands ordered by the wholesaler prior to

 

 

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1    the brewer making any payment (including a good faith
2    payment as provided in this subsection) to the wholesaler,
3    the wholesaler shall be entitled to injunctive relief and
4    attorneys' fees and shall subject the brewer to punitive
5    damages. Upon receipt of this payment, the wholesaler must
6    surrender the affected brand or brands to the brewer,
7    provided that such surrender shall not affect the brewer's
8    obligation to pay all amounts ultimately determined due to
9    the wholesaler under this Act.
10    (2) Except as otherwise provided in subsection (1.5), in
11the event that the brewer and the beer wholesaler are unable to
12mutually agree on the reasonable compensation to be paid for
13the value of the wholesaler's business, as defined in this Act,
14either party may maintain a civil suit as provided in Section 9
15or the matter may, by mutual agreement of the parties, be
16submitted to a neutral arbitrator to be selected by the parties
17and the claim settled in accordance with the rules provided by
18the American Arbitration Association. Arbitration costs shall
19be paid one-half by the wholesaler and one-half by the brewer.
20The award of the arbitrator shall be final and binding on the
21parties.
22(Source: P.A. 96-482, eff. 8-14-09; 97-1119, eff. 8-27-12.)
 
23    Section 99. Effective date. This Act takes effect upon
24becoming law.