BIFDA stands for Beer Industry Fair Dealing Act and BFD — well — that stands for Big F***ing Deal. And while the state’s BIFDA isn’t talked about all too often outside of sit-downs between brewers and wholesalers it is a big deal. And we’re going to tell you why.
The Illinois Beer Industry Fair Dealing Act, which became law in 1982, is a set of bylaws for both distributors and brewers to follow to encourage the two to play nice in the beer industry sandbox. The Act lays out the steps to follow when an agreement is terminated, how reasonable compensation is determined and rules of conduct. It’s not the sexiest thing to talk about in a business full of exotic beer names, creative ingredients and passionate people. But it’s a necessary part of the process.
Legislation was recently introduced by lawmakers in both the Illinois House and Senate to alter portions of Illinois’ Beer Industry Fair Dealing Act.
One bill (SB 3179), backed by the Associated Beer Distributors of Illinois, would require a brewer who terminates an agreement with their distributor to continue to supply a wholesaler with beer until reasonable compensation is accepted by the distributor. However the ABDI has put the brakes on that bill due to some recently unearthed, unintended consequences.
It’s worth noting that the ABDI backed-off on this bill after a pow-wow with the Illinois Craft Brewers Guild, who voiced some objections.
That leaves two Illinois Craft Brewers Guild backed bills (HB 5400 & SB 3284) in play. These two bills also deal with the termination of an agreement between a brewer and distributor and proposes to shrink the amount of time a wholesaler would retain the rights to a brewers beers while the two settle their dispute over reasonable compensation.
The current law gives a two-year time frame for that to happen and the ICBG wants to change that to six months. Keep in mind, this would kick in once all options are exhausted to reach an agreement on what fair market value is for those brands — basically speeding up the final leg of what is already an exhaustive process. The House sponsor of the bill is State Representative Ann Williams (D-Chicago) while the Senate sponsor is State Senator Tom Cullerton (D-Villa Park), a cousin to Senate President John Cullerton (D-Chicago).
According to a one-sheeter sent out by the ICBG the change; “Allows a craft brewer to switch over its brand(s) promptly to ensure continued business growth and fairly protects the brewer from any potential negative effects that could occur during the time the distributor retains the brand(s) while working through a legal battle,” among other pluses.
The ICBG bills, which are identical, have been assigned to their chamber’s respective Executive Committees.
If either are approved this session this would be the second tweak in three years to the BIFDA. In 2012 lawmakers passed an ABDI backed bill, which the governor signed into law, that lowered the threshold for compensation when a brewer and distributor part ways.