Constellation Brands fined $420k for trade practice violations

Crown Imports, a subsidiary of drinks giant Constellation Brands, has been fined US$420,000 by the US Alcohol and Tobacco Tax and Trade Bureau (TTB) for alleged “trade practice violations” in Chicago.

In a newsletter published on 24 May, the TTB announced that it had accepted a “$420,000 offer in compromise from Crown Imports LLC for alleged trade practice violations”.

In a supporting document, it claimed that Crown Imports, which has a portfolio of beer brands including Corona Extra, Corona Light, Modelo Especial, Pacifico, Negra Modelo and Victoria, had “engaged in activities and conduct that violated 27 U.S.C 205(b).”

Expanding on this, it claimed that Crown had entered into agreements or understandings with retailers in Illinois indirectly through an independent third party or an affiliate of the retailer. Payment of these parties resulted in the retailer receiving money for “advertising, display and distribution services” relating to Crown’s portfolio of beer brands. In sum, Crown effectively paid to gain shelf space for its products.

According to the TTB, the violations occurred during the period 1 January 2016 and 25 April 2019 at an address in Chicago, Illinois.

This comes after a number of companies including Heineken USA and Eagle Brands were fined following similar trade violations.

Constellation Brands acquired the remaining 50% stake in Crown that it did not already own in 2012. It previously ran the company as a joint venture with Grupo Modelo but acquired the entire business when AB InBev completed its acquisition of Modelo.