TRENTON — Attorney General Gurbir S. Grewal and the Division of Alcoholic Beverage Control (ABC) announced that New Jersey’s two largest wine and spirits wholesalers will pay $4 million each to resolve findings that they engaged in discriminatory trade practices that unfairly favored their largest retail customers. In addition, twenty retailers statewide will pay a total of $2.3 million for their part in the unlawful scheme.

In separate Consent Orders with ABC, wholesalers Allied Beverage Group and Fedway Associates agreed to pay record-high monetary penalties and change their business practices to resolve trade violations uncovered during a sweeping two-year investigation by ABC’s Enforcement and Investigations Bureaus.

The investigation found that the wholesalers – which together account for approximately 70% of all wine and 80% of all spirits sold at wholesale in the State – unfairly favored 20 of the State’s largest wine and spirits retailers and put smaller retailers at a competitive disadvantage by manipulating the retailer incentive program (RIP), granting credit extensions and interest-free loans, and engaging in other discriminatory practices.

“Simply put, Allied Beverage Group and Fedway Associates rigged the market in favor of a handpicked group of powerful retailers, leaving smaller businesses struggling to compete. The unprecedented monetary penalties imposed reflect the egregiousness of this conduct and the widespread negative impact it had on New Jersey consumers and retailers,” said Attorney General Gurbir S. Grewal. “This settlement sends a clear message that we will not tolerate this manipulative and anticompetitive behavior.”

The RIPs provide cash rebates paid to retailers by wholesalers for purchasing certain quantities of alcoholic beverages. ABC regulations control the program by making RIPs available to all retailers on a non-discriminatory basis, by keeping the RIP payments to retailers relatively small, and by not allowing wholesalers to substitute RIPs for interest-free loans.

The investigation found that Allied Beverage Group and Fedway Associates were giving chosen retailers a financial advantage by issuing rebates more often and in greater amounts than allowed. They also failed to wait the required 30 days before issuing rebates, thus allowing those retailers to use that money to pay for the orders for which the rebates were issued, which is against ABC regulations. Retailers who do not pay for orders within 30 days are put on industry-wide cash-only delivery status, so the early rebates ensured that the larger retailers would have a ready cash flow to pay for their orders on time, giving them an unfair edge over smaller retailers who had to use their own money to pay for their wine and spirits orders within the required 30-day window.

The investigation also found that Allied Beverage Group and Fedway Associates falsified records related to RIPs and/or used undocumented gift cards to make cash payments to chosen retailers that were not accounted for.

“Retail incentives are a legitimate marketing tool as long they are above board and available equally to all retailers. Discriminatory practices like these foster instability in the market by harming smaller retailers” said James Graziano, Acting Director of the Division of Alcoholic Beverage Control. “If left unchecked, the ability of small retailers to remain in business may have been jeopardized and consumers would have less access to retail stores and the specialized product selections that they offer. We will continue to monitor industry practices to ensure an equal playing field in New Jersey’s alcoholic beverage retail industry and hold violators accountable for noncompliance.”

The monetary payments from Allied and Fedway are the largest in ABC’s history, and in addition, both entities each agreed to adopt a corrective action plan; employ a compliance monitor for two years; make upgrades to their computer systems; and facilitate the retirement, resignation and/or termination of certain employees. (Click here for Allied Beverage Group Consent Order.) – (Click here for Fedway Associates Consent Order.)

The following retailers were charged with ABC violations that included accepting the delivery of alcoholic beverages from Allied and/or Fenway upon terms that violated ABC regulations; accepting a loan from a wholesaler to pay a wholesaler and/or avoid being placed on cash-on-delivery status; receiving a RIP before paying the invoice, receiving a RIP in excess of allowed maximum on a product. Each retailer entered a Consent Order with ABC to resolve the charges, with the following settlement terms:

• 70 Wine and Spirits, LLC, t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.
• Ashburn Corp., t/a Roger Wilco: $200,000 monetary offer in compromise in lieu of suspension plus corrective action.
• Birchfield Ventures, Inc., t/a Joe Canal’s Discount Liquor Market (Woodbridge): $90,000 monetary offer in compromise in lieu of suspension.
• Birchfield Ventures, Inc. t/a Joe Canal’s Discount Liquor Outlet (Lawrenceville): $160,000 monetary offer compromise in lieu of suspension.
• Bernardsville Wine Company, LLC t/a Gary’s Wine & Marketplace: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.
• BLW World, Inc., t/a Liquor World of Fort Lee: $110,000 monetary offer in compromise in lieu of suspension.
• Closter Wine and Spirits t/a Gary’s Wine & Marketplace: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.
• Ecclipse LLC, t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.
• The Hudson Wine Market t/a Hudson Wine Market: $90,000 monetary offer in compromise in lieu of suspension.
• Jelma, Inc., t/a Gary’s Wine & Marketplace: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.
• Leiham Corp., t/a Bayway World of Liquors: $375,000 monetary offer in compromise in lieu of suspension plus phased-in retirement of the manager and other corrective action.
• Meritage Wine Cellars LLC, t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.
• MM Wine & Spirits Inc., t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.
• Richard McAdam, Inc., t/a Stirling World of Liquor and Stirling Fine Wines: $110,000 monetary offer in compromise in lieu of suspension.
• Somerset Wine Company, LLC, t/a Gary’s Wine & Marketplace: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.
• SVGI, Inc., t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.
• SVGS Inc., t/a Vingo Wine and Spirits: $90,000 (including $62,500 unaccounted for cash seized from the store) monetary offer in compromise in lieu of suspension plus corrective action.
• Vinvigo, LLC, t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.
• VSGI LLC, t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.
• Vive Naini, LLC, t/a Vingo Wine and Spirits: $90,000 monetary offer in compromise in lieu of suspension plus corrective action.

MORRIS COUNTY — Keeping with the nation’s oldest rivalry, Assemblyman Ryan Peters, a U.S. Naval Academy graduate shaved the head of Assemblyman Brian Bergen, a West Point graduate, at his legislative district office in Lumberton.

Chalk one up for Midshipmen after Bergen lost an early summer bet. The Morris County lawmaker bet that a bill he introduced (A4147) to limit Governor Phil Murphy’s executive order authority would pass the state legislature before September 1, but it did not.

The measure would have required the full state legislature to vote on any of the governor’s executive orders within two weeks or else the order would expire.

“In theory, this should’ve been a bipartisan bill that puts the power back in the hands of the people and the legislators they voted for to represent them. All this would have done is bring back the system of checks and balances our founding fathers created,” Peters (R-Burlington) said.

“But the Democrat legislators are obviously intent on sitting back and letting the governor make every decision for them and everyone else in the state for six months and counting. I was fairly certain that would be the case,” he continued.

“I made a bet expecting good policy that enforces checks-and-balances would triumph over politics,” said Bergen (R-Morris).  “Unfortunately, that isn’t the case in New Jersey where Democrats view checks-and-balances as obstruction of power instead of a fundamental American principle.  Next time I will take a safer bet, like who will win the Army versus Navy football game this year!”

Bergen stopped by Peters’ office on 668 Main Street in Lumberton at 9:30 a.m. on Friday, September 4. Peters shaved his head with a straight razor and shaving cream.

“The Democrat legislators in this state had a chance to join Republicans and choose democracy over a monarchy, and they went with the latter,” Peters said. “Now we’re going to go through with our bet to highlight how absurd this New Jersey monarchy has become.”