ATF SAYS BEER-SLOTTING BAN TO STAY

JOANNA RAMEY

WASHINGTON (FNS) -- The federal government wants to continue prohibiting retailers from charging slotting fees for beer, wine and liquor, despite recent press reports to the contrary that caused many alcohol marketers to break into a cold sweat.

Although the Bureau of Alcohol, Tobacco and Firearms is examining possible changes in strict post-Prohibition regulations governing the sale of alcohol, agency representatives told SN that the bureau hasn't changed its mind that such fees paid to retailers for shelf space -- a practice widely used for other products in supermarkets -- threaten a store's independence when it comes to selling alcohol.

The topic came up as the bureau prepared to issue proposed new regulations. The wholesale alcoholic beverage industry was on edge, following reports in the Wall Street Journal and other publications that the bureau would propose legalizing slotting fees.

While acknowledging that a 1992 federal court decision, Fedway Associates vs. United States Treasury, paved the way for loosening some regulations intended to keep distance between retailers and suppliers, a bureau spokesman told SN the Journal report was misguided.

"They had it wrong. Their source was wrong," the spokesman said.

Doug Metz, managing director of the Wine and Spirits Wholesalers of America, said "At no time did I ever hear that a government official in Washington was considering or proposing any permission for slotting allowances."

According to the bureau's proposal, issued April 26: "In effect, competition is restricted because the retailer who is dependent on or tied to an industry member cannot make free and rational business choices on whether to make a current purchase from another industry member based on current business considerations such as consumer demand or lower prices offered by the competition."

The comment period on the proposal, which calls for changes in other regulations, such as when distributors can provide displays to retailers, lasts until June 27.

Although the proposal covers several fronts, it is the prospect of alcohol slotting fees -- which could be a big money maker for retailers -- that has captured the most attention. Officials with the Food Marketing Institute and the National Grocers Association declined to comment on how the retail industry views slotting fees for alcohol until they've had a chance to review the plan.

"It's a very detailed and far-reaching regulation," said George Green, FMI vice president and general counsel. "This looks like a major modification and overhaul of regulations that go back to the 1930s."

Wholesalers and distributors, who would have to pay such fees, obviously were pleased the ATF said it wants to continue the prohibition, in place since enactment of the Federal Alcohol Administration Act of 1935. The ban on slotting fees evolved out of concern that pre-Prohibition corruption in the alcohol distribution chain when retailers were beholden to brewers would erupt anew.

"We applaud the ATF for including such explicit language against slotting fees in its proposal," said Metz of the Wine and Spirits Wholesalers of America.

"Many, many smaller operations wouldn't be able to compete" if there were slotting fees, said a spokesman for the National Beer Wholesalers Association.

The ATF also:

· Declined to permit negotiations of price for equipment between alcohol suppliers and retailers. · Proposed to increase to $500 from $100 the value of product displays per store that suppliers can loan to stores.