Wine, spirits firms face $10M penalty over unfair practices

TRENTON » New Jersey’s two biggest wine and spirits wholesalers as well as 20 retailers agreed to pay a combined $10.3 million to settle findings they engaged in discriminatory trade practices, the state attorney general said Tuesday.

The two wholesalers will each pay a $4 million fine for their role in what he called an unlawful scheme, while the retailers face $2.3 million in penalties, Attorney General Gurbir Grewal said in a statement.

Allied Beverage Group and Fedway Associates together account for about 70% of the wine and 80% of the spirits sold at wholesale in New Jersey.

Together, their penalty is the biggest in the history of the Division of Alcoholic Beverage Control, according to the attorney general’s statement. The attorney general oversees the division.

Messages seeking comment were left with the companies.

Investigators found the wholesalers used an incentive program under the control of state beverage regulators to give interestfree loans, credit extensions and other discriminatory practices to just 20 retailers in the state, according to Grewal.

The incentive program is intended to keep payments “relatively small” and bars wholesalers from substituting interest-free loans, Grewal said.

Allied Beverage and Fedway gave some retailers an advantage over smaller competitors by issuing rebates more often and in greater amounts than allowed, authorities said.

“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 beverage control division.

Both firms said they would adopt a corrective action plan and hire a compliance monitor for two years, the attorney general said. They’ll also upgrade their computer systems and either fire certain employees or seek to make them resign or retire.

The 20 retailers face penalties from $90,000 to $375,000, totaling $2.3 million.