TRADE PRACTICE VIOLATION INVESTIGATIONS-UPDATE “DON’T ASK, DON’T TAKE- DON’T OFFER, DON’T GIVE”
Following complaints about trade practice violations in the Connecticut liquor industry, the Department of Consumer Protection held an all-day conference entitled the “Connecticut Industry Leadership Summit and Liquor Compliance Conference” on April 22, 2009 at the Chevrolet Theatre in Wallingford, Connecticut.
At that time, the department provided guidance and a warning to Connecticut wholesalers and others about alleged trade practices rampant throughout the three tiers (suppliers, wholesalers, and retailers) and the department’s commitment to regulate and “level the playing field”.
Some heeded the department’s warning; some chose not to. Since the time of the “Summit”, as it became known in the industry, the department has spent considerable time, effort, and resources investigating and responding to ongoing complaints of trade practice violations. All three tiers have been investigated and entities within each have been subjected to scrutiny and regulatory action.
Since 2010, the department has levied civil penalty fines totaling about $2 million dollars and a high number of suspensions (some held in abeyance) affecting suppliers, wholesalers, and retailers. To date, about 100 suppliers, wholesalers, and retailers have been the subject of administrative action by the department. Others are still pending.
Still, some within the industry report that the problem persists. We will continue to receive such complaints and investigate them. A review of our investigations reveals a common characteristic: Where senior management of an entity exhibits a laissez-faire attitude toward compliance, then that culture permeates throughout the business, leading to cutting corners and improper deal-making.
Even today, we find that some leaders are willing to point accusatory fingers at their competitors while remaining blind to their own conduct or the conduct of their employees. Some of the schemes or improper practices which we have found, and are still finding, within the industry are the following:
1. The providing of cash, gift cards, trips, tickets to events by wholesalers and suppliers
2. Cash through false invoicing on liquor and/or returns by wholesalers to retailers
3. Quantity discounts being demanded by retailers or being offered by wholesalers
4. Abuse of liquor samples by wholesaler representatives
5. Purchasing and/or Installation of equipment by suppliers or wholesalers to retail accounts
6. Salesmen funneling money directly to retailers. Promotional funds to salesmen are going to directly to retailers.
7. Liquor being diverted to unauthorized entities by wholesalers and retailers.
Now is the time for all leadership within all tiers of the liquor industry to reexamine their business practices, their internal controls, and whether true leadership and guidance is given to those who represent your company.
“Don’t follow the crowd, let the crowd follow you”. – Margaret Thatcher
The Department of Consumer Protection, through the State Liquor Control Commission, oversees all sales of liquor in the State of Connecticut.
165 Capitol Avenue, Hartford, Connecticut 06106-1630
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