HCS HB 957 & 1063 -- BREWERS AND WHOLESALERS OF BEER

This bill expands the definition of "good cause" as it relates
to a franchise between a supplier and wholesaler of intoxicating
liquor.  The new definition allows for the noncontinuance or
change of a franchise if the wholesaler's federal basic permit
or any state or local license has been revoked or suspended for
more than 31 days.  The provisions of this bill only apply to
agreements entered on or after the effective date of this bill.

HCS HB 957 & 1063 -- BREWERS AND WHOLESALERS OF BEER (Hoppe)

This bill expands the definition of "good cause" as it relates
to a franchise between a supplier and wholesaler of intoxicating
liquor.  The new definition allows for the noncontinuance or
change of a franchise if the wholesaler's federal basic permit
or any state or local license has been revoked or suspended for
more than 31 days.  The provisions of this bill only apply to
agreements entered on or after the effective date of this bill.

FISCAL NOTE:  No impact on state funds.

HCS HB 957 & 1063 -- BREWERS AND WHOLESALERS OF BEER

SPONSOR:  Hoppe

COMMITTEE ACTION:  Voted "do pass" by the Committee on Local
Government and Related Matters by a vote of 16 to 0.

This substitute expands the definition of "good cause" as it
relates to a franchise between a supplier and wholesaler of
intoxicating liquor.  The new definition allows for the
noncontinuance or change of a franchise if the wholesaler's
federal basic permit or any state or local license has been
revoked or suspended for more than 31 days.  The provisions of
this substitute only apply to agreements entered on or after the
effective date of this substitute.

FISCAL NOTE:  No impact on state funds.

PROPONENTS:  Supporters say that this bill only applies to new
wholesalers.  It would bring wholesalers under franchise law and
would promote good relations between wholesalers and brewers.

Testifying for the bill were Representative Thomason; and the
Missouri Beer Wholesalers Association.

OPPONENTS:  There was no opposition voiced to the committee.

Steve Bauer, Legislative Analyst

HB 957 -- Brewers and Wholesalers of Beer

Co-Sponsors:  Thomason, Kreider

This "Beer Industry Fair Dealing Law" regulates commercial
agreements made between brewers and wholesalers of beer.  In its
main provisions it:

(1)  Prohibits brewers from amending, cancelling, terminating,
or refusing to continue agreements with wholesalers unless
certain conditions are met, such as good cause, as defined, and
prior notification of the intent to make such a change;

(2)  Provides that prior notification of the brewer's intent to
change an agreement with a wholesaler is not required in certain
circumstances, such as bankruptcy, license revocation or
suspension, or felony conviction of the wholesaler;

(3)  Prohibits brewers from requiring wholesalers to agree to
unreasonable terms or conditions regarding the sale of other
brewers' products and requiring wholesalers to accept delivery
of products which have not been ordered;

(4)  Requires, on the effective date of this bill, brewers to
assign brand extensions to the wholesaler who has the exclusive
sales territory for the brand from which the brand extension
resulted;

(5)  Requires brewers to act reasonably when assets or voting
stock of a wholesaler are assigned, sold, or transferred, and in
the event of the death of the wholesaler or a partner involved
in the partnership operating the wholesaler's business;

(6)  Requires brewers who, without good cause, cancel, terminate
or fail to renew an agreement with a wholesaler, or who
unreasonably withhold consent to any assignment, transfer, or
sale of a wholesaler's assets or voting stock to pay the
wholesaler the fair market value of the wholesaler's business
with regard to the affected brands of beer;

(7)  Allows brewers and wholesalers to use binding arbitration
to resolve disputes over the existence of good cause or the
determination of fair market value.  If arbitration is used, the
costs are divided evenly between the brewer and wholesaler;

(8)  Permits any aggrieved wholesaler to take civil action if a
brewer violates any of the bill's provisions, or if reasonable
compensation for damages is not agreed upon and the dispute is
not submitted to arbitration.  The wholesaler is entitled to
actual damages, reasonable attorneys' fees, and court costs in
civil actions in which the wholesaler prevails;

(9)  Prohibits brewers from fixing the price at which the
wholesaler sells alcoholic beverages, and from raising the price
charged to wholesalers within 60 days of any resale price
increase imposed by wholesalers which exceeds that recommended
by a brewer;

(10)  Requires anyone who purchases a brewery to continue with
all terms and conditions of a commercial agreement in effect at
the time of the purchase; and

(11)  Prohibits brewers and wholesalers from restricting the
right of free association for any lawful purpose.

The provisions of this bill cover agreements entered into after
the effective date of the bill and to any amendments,
cancellations, terminations, nonrenewal, discontinuance, forced
resignation, or material modification of any agreement occurring
after such date.