NJ: NJ Brewery Wholesaler to Pay $2M Fine for Underselling

New Jersey Law Journal

By Michael Booth

June 12, 2017

A New Jersey craft beer wholesaler has agreed to pay $2 million and surrender its license to settle claims of anti-competitive trade practices.

The Division of Alcoholic Beverage Control claimed that the Hunterdon Brewing Co. of Whitehouse Station sold draft beer tap systems at below fair market prices and concealed the charges by mislabeling them as “miscellaneous draft charges” on invoices, and ignored credit regulation for at least 700 retail customers.

According to a release from the New Jersey Attorney General’s Office, the fine—agreed to by Hunterdon Brewing in a consent order signed May 31 and made public Monday—is the largest ever imposed on a single wholesale licensee for trade practice violations, according to the statement.

“Fair market prices exist for a reason. The improper trade practices allegedly employed by Hunterdon Brewing threatened to disrupt competition and throw the wholesale industry into disarray,” Attorney General Christopher Porrino said in a statement. “Consumers suffer when these laws and regulations are ignored. The Division’s actions ensure that New Jersey consumers will continue to benefit from a stable alcoholic beverage industry.”

All the alleged offenses are violations of New Jersey statutes and regulations governing the sale and distribution of alcoholic beverages.

In addition to the fine and license suspension, the brewery also agreed to participate in annual instruction compliance seminars and to have a third-party certified public account conduct regular audits of its invoices, billing records, credit records, and marketing and compliance practices, according to the consent order.

The brewery will be allowed to pay its fines in four staggered payments ending in August 2019. The order provided that if the payments are made on time and other requirements are met, the final $250,000 installment will be waived.

Jonathan Orsen, acting division director, said in the statement: “When a wholesaler utilizes discriminatory trade practices, competition among wholesalers is stifled and consumers lose the benefits which open competition provides.”

Orsen said Hunterdon Brewing’s parent company, Craft Beer Guild, cooperated with the investigation.

Senior Enforcement Bureau Chief Kevin Schatz and Assistant Attorneys General Alyssa Bloom, Andrew Sapolnick and Richard Karczewski handled the case for the division.

Nicholas Bergman of the Buchman Law Firm in New York represented the brewery. He could not be reached for comment.