The Wheeler Report reported on Thursday that five trade associations have raised concerns to state legislators about rumored proposed amendments to Wisconsin’s Fair Dealership Law that would make it easier for wine and spirits distributors to transfer brand distribution agreements to third parties.
One letter to legislators dated May 14, 2015 was jointly authored by the Wisconsin Restaurant Association, the Wisconsin Petroleum Marketers & Convenience Store Association and the Wisconsin Grocers Association, all representing retail sellers. Another letter, also dated May 14, 2015, came from the Distilled Spirits Council of the United States and the Wine Institute, who advocate for manufacturers.
The associations allege that at least one wine and spirits wholesaler has sought amendments to the WFDL similar to changes that were enacted by the Wisconsin Legislature in 1999, but were significantly limited by a partial veto by then-Gov. Tommy Thompson. That partial veto eliminated a section that would have provided that a change in management, ownership or control of a wholesaler would not be “good cause” under the WFDL for a grantor to terminate, cancel, fail to renew or substantially change the competitive circumstances of a wholesaler, as long as the successor wholesaler met the grantor’s reasonable and material qualification standards in effect at the time of the change.
Other provisions of the 1999 legislation expressly defined “dealer” to include liquor wholesalers, without reference to the “community of interest” requirement for dealer status under the WFDL. The expanded definition of dealer provided exceptions from WFDL coverage where the manufacturer had never produced more than 200,000 gallons of liquor in a single year, or where the distributor’s net revenues from sales of all brands produced by that grantor was less than 5% of all liquor sold by the distributor. These provisions survived the partial veto. The original legislation, however, would have similarly expanded the definition of dealer to cover wine distributors. A creative partial veto from then-Gov. Thompson removed wine distributors from that protected class.