TITLE 27—INTOXICATING LIQUORS
CHAPTER 8—FEDERAL ALCOHOL
ADMINISTRATION ACT
§ 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.
As amended January 5, 2009