§ 205. — Unfair competition and unlawful practices.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 27USC205]
TITLE 27--INTOXICATING LIQUORS
CHAPTER 8--FEDERAL ALCOHOL ADMINISTRATION ACT
SUBCHAPTER I--FEDERAL ALCOHOL ADMINISTRATION
Sec. 205. Unfair competition and unlawful practices
It shall be unlawful for any person engaged in business as a
distiller, brewer, rectifier, blender, or other producer, or as an
importer or wholesaler, of distilled spirits, wine, or malt beverages,
or as a bottler, or warehouseman and bottler, of distilled spirits,
directly or indirectly or through an affiliate:
(a) Exclusive outlet
To require, by agreement or otherwise, that any retailer engaged in
the sale of distilled spirits, wine, or malt beverages, purchase any
such products from such person to the exclusion in whole or in part of
distilled spirits, wine, or malt beverages sold or offered for sale by
other persons in interstate or foreign commerce, if such requirement is
made in the course of interstate or foreign commerce, or if such person
engages in such practice to such an extent as substantially to restrain
or prevent transactions in interstate or foreign commerce in any such
products, or if the direct effect of such requirement is to prevent,
deter, hinder, or restrict other persons from selling or offering for
sale any such products to such retailer in interstate or foreign
commerce; or
(b) ``Tied house''
To induce through any of the following means, any retailer, engaged
in the sale of distilled spirits, wine, or malt beverages, to purchase
any such products from such person to the exclusion in whole or in part
of distilled spirits, wine, or malt beverages sold or offered for sale
by other persons in interstate or foreign commerce, if such inducement
is made in the course of interstate or foreign commerce, or if such
person engages in the practice of using such means, or any of them, to
such an extent as substantially to restrain or prevent transactions in
interstate or foreign commerce in any such products, or if the direct
effect of such inducement is to prevent, deter, hinder, or restrict
other persons from selling or offering for sale any such products to
such retailer in interstate or foreign commerce: (1) By acquiring or
holding (after the expiration of any existing license) any interest in
any license with respect to the premises of the retailer; or (2) by
acquiring any interest in real or personal property owned, occupied, or
used by the retailer in the conduct of his business; or (3) by
furnishing, giving, renting, lending, or selling to the retailer, any
equipment, fixtures, signs, supplies, money, services, or other thing of
value, subject to such exceptions as the Secretary of the Treasury shall
by regulation prescribe, having due regard for public health, the
quantity and value of articles involved, established trade customs not
contrary to the public interest and the purposes of this subsection; or
(4) by paying or crediting the retailer for any advertising, display, or
distribution service; or (5) by guaranteeing any loan or the repayment
of any financial obligation of the retailer; or (6) by extending to the
retailer credit for a period in excess of the credit period usual and
customary to the industry for the particular class of transactions, as
ascertained by the Secretary of the Treasury and prescribed by
regulations by him; or (7) by requiring the retailer to take and dispose
of a certain quota of any of such products; or
(c) Commercial bribery
To induce through any of the following means, any trade buyer
engaged in the sale of distilled spirits, wine, or malt beverages, to
purchase any such products from such person to the exclusion in whole or
in part of distilled spirits, wine, or malt beverages sold or offered
for sale by other persons in interstate or foreign commerce, if such
inducement is made in the course of interstate or foreign commerce, or
if such person engages in the practice of using such means, or any of
them, to such an extent as substantially to restrain or prevent
transactions in interstate or foreign commerce in any such products, or
if the direct effect of such inducement is to prevent, deter, hinder, or
restrict other persons from selling or offering for sale any such
products to such trade buyer in interstate or foreign commerce: (1) By
commercial bribery; or (2) by offering or giving any bonus, premium, or
compensation to any officer, or employee, or representative of the trade
buyer; or
(d) Consignment sales
To sell, offer for sale, or contract to sell to any trade buyer
engaged in the sale of distilled spirits, wine, or malt beverages, or
for any such trade buyer to purchase, offer to purchase, or contract to
purchase, any such products on consignment or under conditional sale or
with the privilege of return or on any basis otherwise than a bona fide
sale, or where any part of such transaction involves, directly or
indirectly, the acquisition by such person from the trade buyer or his
agreement to acquire from the trade buyer other distilled spirits, wine,
or malt beverages--if such sale, purchase, offer, or contract is made in
the course of interstate or foreign commerce, or if such person or trade
buyer engages in such practice to such an extent as substantially to
restrain or prevent transactions in interstate or foreign commerce in
any such products or if the direct effect of such sale, purchase, offer,
or contract is to prevent, deter, hinder, or restrict other persons from
selling or offering for sale any such products to such trade buyer in
interstate or foreign commerce: Provided, That this subsection shall not
apply to transactions involving solely the bona fide return of
merchandise for ordinary and usual commercial reasons arising after the
merchandise has been sold; or
(e) Labeling
To sell or ship or deliver for sale or shipment, or otherwise
introduce in interstate or foreign commerce, or to receive therein, or
to remove from customs custody for consumption, any distilled spirits,
wine, or malt beverages in bottles, unless such products are bottled,
packaged, and labeled in conformity with such regulations, to be
prescribed by the Secretary of the Treasury, with respect to packaging,
marking, branding, and labeling and size and fill of container (1) as
will prohibit deception of the consumer with respect to such products or
the quantity thereof and as will prohibit, irrespective of falsity, such
statements relating to age, manufacturing processes, analyses,
guarantees, and scientific or irrelevant matters as the Secretary of the
Treasury finds to be likely to mislead the consumer; (2) as will provide
the consumer with adequate information as to the identity and quality of
the products, the alcoholic content thereof (except that statements of,
or statements likely to be considered as statements of, alcoholic
content of malt beverages are prohibited unless required by State law
and except that, in case of wines, statements of alcoholic content shall
be required only for wines containing more than 14 per centum of alcohol
by volume), the net contents of the package, and the manufacturer or
bottler or importer of the product; (3) as will require an accurate
statement, in the case of distilled spirits (other than cordials,
liqueurs, and specialties) produced by blending or rectification, if
neutral spirits have been used in the production thereof, informing the
consumer of the percentage of neutral spirits so used and of the name of
the commodity from which such neutral spirits have been distilled, or in
case of neutral spirits or of gin produced by a process of continuous
distillation, the name of the commodity from which distilled; (4) as
will prohibit statements on the label that are disparaging of a
competitor's products or are false, misleading, obscene, or indecent;
and (5) as will prevent deception of the consumer by use of a trade or
brand name that is the name of any living individual of public
prominence, or existing private or public organization, or is a name
that is in simulation or is an abbreviation thereof, and as will prevent
the use of a graphic, pictorial, or emblematic representation of any
such individual or organization, if the use of such name or
representation is likely falsely to lead the consumer to believe that
the product has been indorsed, made, or used by, or produced for, or
under the supervision of, or in accordance with the specifications of,
such individual or organization: Provided, That this clause shall not
apply to the use of the name of any person engaged in business as a
distiller, brewer, rectifier, blender, or other producer, or as an
importer, wholesaler, retailer, bottler, or warehouseman, of distilled
spirits, wine, or malt beverages, nor to the use by any person of a
trade or brand name used by him or his predecessor in interest prior to
August 29, 1935; including regulations requiring, at time of release
from customs custody, certificates issued by foreign governments
covering origin, age, and identity of imported products: Provided
further, That nothing herein nor any decision, ruling, or regulation of
any Department of the Government shall deny the right of any person to
use any trade name or brand of foreign origin not presently effectively
registered in the United States Patent and Trademark Office which has
been used by such person or predecessors in the United States for a
period of at least five years last past, if the use of such name or
brand is qualified by the name of the locality in the United States in
which the product is produced, and, in the case of the use of such name
or brand on any label or in any advertisement, if such qualification is
as conspicuous as such name or brand.
It shall be unlawful for any person to alter, mutilate, destroy,
obliterate, or remove any mark, brand, or label upon distilled spirits,
wine, or malt beverages held for sale in interstate or foreign commerce
or after shipment therein, except as authorized by Federal law or except
pursuant to regulations of the Secretary of the Treasury authorizing
relabeling for purposes of compliance with the requirements of this
subsection or of State law.
In order to prevent the sale or shipment or other introduction of
distilled spirits, wine, or malt beverages in interstate or foreign
commerce, if bottled, packaged, or labeled in violation of the
requirements of this subsection, (1) no bottler of distilled spirits, no
producer, blender, or wholesaler of wine, or proprietor of a bonded wine
storeroom, and no brewer or wholesaler of malt beverages shall bottle,
and (2) no person shall remove from customs custody, in bottles, for
sale or any other commercial purpose, distilled spirits, wine, or malt
beverages, respectively, after such date as the Secretary of the
Treasury fixes as the earliest practicable date for the application of
the provisions of this subsection to any class of such persons (but not
later than August 15, 1936, in the case of distilled spirits, and
December 15, 1936, in the case of wine and malt beverages, and only
after thirty days' public notice), unless, upon application to the
Secretary of the Treasury, he has obtained and has in his possession a
certificate of label approval covering the distilled spirits, wine, or
malt beverages, issued by the Secretary in such manner and form as he
shall by regulations prescribe: Provided, That any such bottler of
distilled spirits, or producer, blender, or wholesaler of wine, or
proprietor of a bonded wine storeroom, or brewer or wholesaler of malt
beverages shall be exempt from the requirements of this subsection if,
upon application to the Secretary, he shows to the satisfaction of the
Secretary that the distilled spirits, wine, or malt beverages to be
bottled by the applicant are not to be sold, or offered for sale, or
shipped or delivered for shipment, or otherwise introduced, in
interstate or foreign commerce. Officers of internal revenue are
authorized and directed to withhold the release of distilled spirits
from the bottling plant unless such certificates have been obtained, or
unless the application of the bottler for exemption has been granted by
the Secretary; and customs officers are authorized and directed to
withhold the release from customs custody of distilled spirits, wine,
and malt beverages, unless such certificates have been obtained. The
District Courts of the United States, and the United States court for
any Territory shall have jurisdiction of suits to enjoin, annul, or
suspend in whole or in part any final action by the Secretary upon any
application under this subsection; or
(f) Advertising
To publish or disseminate or cause to be published or disseminated
by radio broadcast, or in any newspaper, periodical or other publication
or by any sign or outdoor advertisement or any other printed or graphic
matter, any advertisement of distilled spirits, wine, or malt beverages,
if such advertisement is in, or is calculated to induce sales in,
interstate or foreign commerce, or is disseminated by mail, unless such
advertisement is in conformity with such regulations, to be prescribed
by the Secretary of the Treasury, (1) as will prevent deception of the
consumer with respect to the products advertised and as will prohibit,
irrespective of falsity, such statements relating to age, manufacturing
processes, analyses, guaranties, and scientific or irrelevant matters as
the Secretary of the Treasury finds to be likely to mislead the
consumer; (2) as will provide the consumer with adequate information as
to the identity and quality of the products advertised, the alcoholic
content thereof (except the statements of, or statements likely to be
considered as statements of, alcoholic content of malt beverages and
wines are prohibited), and the person responsible for the advertisement;
(3) as will require an accurate statement, in the case of distilled
spirits (other than cordials, liqueurs, and specialties) produced by
blending or rectification, if neutral spirits have been used in the
production thereof, informing the consumer of the percentage of neutral
spirits so used and of the name of the commodity from which such neutral
spirits have been distilled, or in case of neutral spirits or of gin
produced by a process of continuous distillation, the name of the
commodity from which distilled; (4) as will prohibit statements that are
disparaging of a competitor's products or are false, misleading,
obscene, or indecent; (5) as will prevent statements inconsistent with
any statement on the labeling of the products advertised. This
subsection shall not apply to outdoor advertising in place on June 18,
1935, but shall apply upon replacement, restoration, or renovation of
any such advertising. The prohibitions of this subsection and
regulations thereunder shall not apply to the publisher of any
newspaper, periodical, or other publication, or radio broadcaster,
unless such publisher or radio broadcaster is engaged in business as a
distiller, brewer, rectifier, or other producer, or as an importer or
wholesaler, of distilled spirits, wine, or malt beverages, or as a
bottler, or warehouseman and bottler, of distilled spirits, directly or
indirectly or through an affiliate.
The provisions of subsections (a), (b), and (c) of this section
shall not apply to any act done by an agency of a State or political
subdivision thereof, or by any officer or employee of such agency.
In the case of malt beverages, the provisions of subsections (a),
(b), (c), and (d) of this section shall apply to transactions between a
retailer or trade buyer in any State and a brewer, importer, or
wholesaler of malt beverages outside such State only to the extent that
the law of such State imposes similar requirements with respect to
similar transactions between a retailer or trade buyer in such State and
a brewer, importer, or wholesaler of malt beverages in such State, as
the case may be. In the case of malt beverages, the provisions of this
subsection and subsection (e) of this section shall apply to the
labeling of malt beverages sold or shipped or delivered for shipment or
otherwise introduced into or received in any State from any place
outside thereof, or the advertising of malt beverages intended to be
sold or shipped or delivered for shipment or otherwise introduced into
or received in any State from any place outside thereof, only to the
extent that the law of such State imposes similar requirements with
respect to the labeling or advertising, as the case may be, of malt
beverages not sold or shipped or delivered for shipment or otherwise
introduced into or received in such State from any place outside
thereof.
The Secretary of the Treasury shall give reasonable public notice,
and afford to interested parties opportunity for hearing, prior to
prescribing regulations to carry out the provisions of this section.
(Aug. 29, 1935, ch. 814, title I, Sec. 105, formerly Sec. 5, 49 Stat.
981; Feb. 29, 1936, ch. 105, Sec. 2, 49 Stat. 1152; June 25, 1936, ch.
804, 49 Stat. 1921; June 26, 1936, ch. 830, title V, Secs. 505, 506, 49
Stat. 1965, 1966; 1940 Reorg. Plan No. III, Sec. 2, eff. June 30, 1940,
5 F.R. 2108, 54 Stat. 1232; Apr. 20, 1942, ch. 244, Sec. 1(h), 56 Stat.
219; June 25, 1948, ch. 646, Sec. 32(b), 62 Stat. 991; May 24, 1949, ch.
139, Sec. 127, 63 Stat. 107; renumbered title I, Sec. 105, and amended
Pub. L. 100-690, title VIII, Sec. 8001(a)(1), (2), (b)(2), Nov. 18,
1988, 102 Stat. 4517, 4521; Pub. L. 106-113, div. B, Sec. 1000(a)(9)
[title IV, Sec. 4732(b)(13)], Nov. 29, 1999, 113 Stat. 1536, 1501A-584.)
Codification
As originally enacted subsec. (e) of this section contained a
reference to the Supreme Court of the District of Columbia. Act June 25,
1936, substituted ``the district court of the United States for the
District of Columbia'' for ``the Supreme Court of the District of
Columbia'', and act June 25, 1948, as amended by act May 24, 1949,
substituted ``United States District Court for the District of
Columbia'' for ``district court of the United States for the District of
Columbia''. However, the words ``United States District Court for the
District of Columbia'' have been deleted entirely as superfluous in view
of section 132(a) of Title 28, Judiciary and Judicial Procedure, which
states that ``There shall be in each judicial district a district court
which shall be a court of record known as the United States District
Court for the district'', and section 88 of Title 28 which states that
``the District of Columbia constitutes one judicial district''.
An amendment to the second proviso of subsec. (e) of this title was
contained in act June 26, 1936, ch. 830, title V, Sec. 506, 49 Stat.
1965. The amendment was to have taken effect when a majority of the
members of the Federal Alcohol Administration authorized to be appointed
under section 202b of this title took office. However, the members were
never appointed and section 202b of this title was repealed by Pub. L.
89-554, Sec. 8(a), Sept. 6, 1966, 80 Stat. 649.
Amendments
1999--Subsec. (e). Pub. L. 106-113 substituted ``United States
Patent and Trademark Office'' for ``United States Patent Office'' in
first par.
1988--Subsec. (e). Pub. L. 100-690, Sec. 8001(b)(2), substituted
``the date of the enactment of this title'' for ``the date of the
enactment of this Act'', which had been translated editorially as
``August 29, 1935'', thereby requiring no change in text.
1942--Subsec. (f)(2). Act Apr. 20, 1942, substituted ``beverages and
wines are prohibited'' for ``beverages are prohibited and except that,
in case of wines, statements of alcoholic content shall be required only
for wines containing more than 14 per centum of alcohol by volume,''.
1936--Subsec. (e). Act Feb. 29, 1936, substituted ``August 15, 1936,
in the case of distilled spirits, and December 15, 1936, in the case of
wine and malt beverages'' for ``March 1, 1936,''.
Subsec. (e). Act June 26, 1936, amended subsec. (e) generally.
Effective Date of 1999 Amendment
Amendment by Pub. L. 106-113 effective 4 months after Nov. 29, 1999,
see section 1000(a)(9) [title IV, Sec. 4731] of Pub. L. 106-113, set out
as a note under section 1 of Title 35, Patents.
Transfer of Functions
``Secretary of the Treasury'' and ``Secretary'' were substituted in
subsecs. (b), (e), and (f) for ``Administrator'', meaning the
Administrator of the Federal Alcohol Administration, pursuant to Reorg.
Plan No. III of 1940, see note set out under section 201 of this title.
Section Referred to in Other Sections
This section is referred to in sections 204, 207 of this title;
title 26 section 5206.
