235 ILCS 5/6-4.5

(235 ILCS 5/6-4.5)

Sec. 6-4.5. Prohibited ownership interests in a distributor, importing distributor, manufacturer of beer, or non-resident dealer.

(a) The General Assembly finds, consistent with Section 6-1.5, that the 3-tier regulatory system is designed to prevent a manufacturer of beer as described in paragraph (19) of subsection (a) of Section 6-2 from exercising vertical integration between a manufacturer of beer and a distributor or importing distributor through any ownership interest, or through control of the distributor or importing distributor. The General Assembly further finds, consistent with Section 6-1.5, that the 3-tier regulatory system is designed to prevent a distributor or importing distributor as described in paragraph (20) of subsection (a) of Section 6-2 from having any ownership interest in a manufacturer of beer as described in paragraph (20) of subsection (a) of Section 6-2 except for the ownership of no more than 5% of the outstanding shares of a manufacturer of beer whose shares are publicly traded on an exchange within the meaning of the Securities Exchange Act of 1934. The General Assembly further finds that it is necessary to have the State Commission undertake an expedited investigation, in accordance with procedural due process, to determine whether any existing manufacturer of beer described in paragraph (19) of subsection (a) of Section 6-2 or any existing distributor or importing distributor described in paragraph (20) of subsection (a) of Section 6-2 owns a prohibited ownership interest, and an orderly process by which an existing manufacturer of beer, distributor, or importing distributor may divest itself of or sever the prohibited ownership interest by no later than January 1, 2015.

(b) Notwithstanding any provision of this Act to the contrary, no person licensed as a manufacturer of beer as described in paragraph (19) of subsection (a) of Section 6-2 shall have any prohibited ownership interest, directly or indirectly, in a person licensed as a distributor or importing distributor. Any person who holds a prohibited ownership interest in a person licensed as a distributor or importing distributor prior to this amendatory Act of the 98th General Assembly shall, in accordance with paragraph (19) of subsection (a) of Section 6-2, be ineligible to receive or hold any license issued by the State Commission, unless that person complies with the provisions of this Section.

(c) Notwithstanding any provision of this Act to the contrary, no person licensed in this State as a distributor or importing distributor as described in paragraph (20) of subsection (a) of Section 6-2 shall have any prohibited ownership interest, directly or indirectly, in a person licensed as a manufacturer of beer as described in paragraph (20) of subsection (a) of Section 6-2. Any person who holds an interest in a person licensed as a distributor or importing distributor in this State prior to this amendatory Act of the 98th General Assembly shall, in accordance with paragraph (20) of subsection (a) of Section 6-2, be ineligible to receive or hold a license by the State Commission, unless the person complies with the provisions of this Section. This subsection (c) shall not apply to a person who owns, on or after the effective date of this amendatory Act of the 98th General Assembly, no more than 5% of the outstanding shares of a manufacturer of beer whose shares are publicly traded on an exchange within the meaning of the Securities Exchange Act of 1934.

(d) Within 30 days after the effective date of this amendatory Act of the 98th General Assembly, the State Commission shall notify in writing all persons licensed by the State Commission as a manufacturer of beer, as described in paragraph (19) of subsection (a) of Section 6-2 of the prohibited ownership interest provision set forth in subsection (b) of this Section and paragraph (19) of subsection (a) of Section 6-2. Also within 30 days after the effective date of this amendatory Act of the 98th General Assembly, the State Commission shall notify in writing all persons licensed by the State Commission as a distributor or importing distributor of the prohibited ownership interest provision set forth in subsection (c) of this Section and paragraph (20) of subsection (a) of Section 6-2. The notice provided by the State Commission shall also state for a manufacturer of beer, as described in paragraph (19) of subsection (a) of Section 6-2, that it is required to disclose in writing any ownership interest it directly or indirectly possesses in a distributor or importing distributor, as described in paragraph (20) of subsection (a) of Section 6-2, the type and amount of ownership interest possessed by it, the length of time the manufacturer of beer has held the ownership interest in the distributor or importing distributor, and any other information specified by the State Commission in its written notice. The notice provided by the State Commission shall also state for a distributor or importing distributor, as described in paragraph (20) of subsection (a) of Section 6-2, that it is required to disclose in writing any ownership interest it directly or indirectly possesses in a manufacturer of beer, as described in paragraph (19) of subsection (a) of Section 6-2, the type and amount of ownership interest possessed by it, the length of time the manufacturer of beer has held the ownership interest in the distributor or importing distributor, and any other information specified by the State Commission in its written notice.

(e) Within 60 days after the effective date of this amendatory Act of the 98th General Assembly, each manufacturer of beer, distributor, or importing distributor subject to notification under subsection (d) of this Section shall disclose in writing and under oath the relevant ownership interest and other required information specified in the notification provided by the State Commission pursuant to that subsection. The written disclosure shall, as a mandatory obligation, be tendered to the State Commission by either personal service or via certified or registered mail at the State Commission's Springfield or Chicago office on or before the 60th day during regular business hours. Failure to tender the required written disclosure shall result in the immediate entry of an order by the State Commission suspending the licensee's license within 5 days after the 60th day, and the initiation of proceedings by the State Commission to enter an order to permanently revoke the licensee's license no later than 45 days after providing the licensee with notice and an opportunity for a hearing. Whenever the State Commission has reason to believe that a person has failed to comply with the Commission notice under this Section, it shall notify the Department of Revenue and the Attorney General, and shall file a complaint with the State's Attorney of the county where the alcoholic liquor was delivered or with appropriate law enforcement officials. Failure to make the written disclosure required under this subsection shall constitute a business offense for which the person shall be fined not more than $5,000 for a first offense, not more than $10,000 for a second offense, and not more than $15,000 for a third or subsequent offense.

(f) Within 180 days after the effective date of this amendatory Act of the 98th General Assembly, the State Commission shall review each of the disclosures tendered to the State Commission by licensees pursuant to subsection (e) and enter an order determining whether or not each licensee is in compliance with subsection (b) or (c) of this Section, whichever is applicable, after providing each licensee with notice and an opportunity for a hearing. As part of making its determination, the State Commission shall also consider any information otherwise admissible under Section 10-40 of the Illinois Administrative Procedure Act.

(g) If the State Commission determines, based on a preponderance of record evidence, that a manufacturer of beer, distributor, or importing distributor has no prohibited ownership interest in a licensee in violation of subsection (b) or (c) of this Section, then the State Commission shall enter an order finding that the manufacturer of beer, distributor, or importing distributor is in compliance with this Section, record the matter as closed, and serve a copy of the order of compliance on the licensee and each person with an ownership interest in the licensee.

If the State Commission determines, based on a preponderance of record evidence, that a manufacturer of beer, as described in paragraph (19) of subsection (a) of Section 6-2, has a prohibited ownership interest as set forth in subsection (b) of this Section, then the State Commission shall enter an order finding that the manufacturer of beer is not in compliance with this Section and that the manufacturer of beer shall divest itself of that interest on or before January 1, 2015, subject to the State Commission's approval of the successive owner pursuant to the State Commission's authority provided in this Act. In addition, the State Commission shall find that the relevant distributor or importing distributor is not in compliance with this Section and that the distributor or importing distributor is required to sever the prohibited ownership interest possessed by the relevant manufacturer of beer on or before January 1, 2015, subject to the State Commission's approval of the successive owner pursuant to the State Commission's authority provided in this Act.

If the State Commission determines, based on a preponderance of record evidence, that a distributor or importing distributor, as described in paragraph (20) of subsection (a) of Section 6-2, has a prohibited ownership interest as set forth in subsection (c) of this Section, then the State Commission shall enter an order finding that the relevant distributor or importing distributor is not in compliance with this Section and that the relevant distributor or importing distributor shall divest itself of that interest on or before January 1, 2015, subject to the State Commission's approval of the successive owner pursuant to the State Commission's authority provided in this Act. In addition, the State Commission shall find that the manufacturer of beer is not in compliance with this Section and that the manufacturer of beer shall sever the prohibited ownership interest possessed by the distributor or importing distributor on or before January 1, 2015, subject to the State Commission's approval of the successive owner pursuant to the State Commission's authority provided in this Act.

The State Commission's order shall further find that the continued ownership of the prohibited ownership interest beyond January 1, 2015 by the manufacturer of beer, distributor, or importing distributor is against the public interest and a violation of this Section and Section 6-1.5 of the Act.

The State Commission's order shall further find for a manufacturer of beer, as described in paragraph (19) of subsection (a) of Section 6-2, found in non-compliance with subsection (b) of this Section that its license is revoked on January 16, 2015 as to the transport, transfer, or sale of any alcoholic liquor to the relevant distributor or importing distributor that the manufacturer of beer has a prohibited ownership interest in if that interest is not properly divested on January 1, 2015, subject to the State Commission's approval of the successive owner pursuant to the State Commission's authority provided in this Act. In addition, the State Commission shall find that the license of a distributor or importing distributor that is subject to the prohibited ownership interest of the manufacturer of beer is revoked on January 16, 2015 as to the transport, transfer, or sale of alcoholic liquor from the relevant manufacturer of beer to any retailer if that ownership interest is not properly severed on January 1, 2015, subject to the State Commission's approval of the successive owner pursuant to the State Commission's authority provided in this Act.

The State Commission's order shall further find for a distributor or importing distributor, as described in paragraph (20) of subsection (a) of Section 6-2, found in non-compliance with subsection (c) of this Section, that its license is revoked on January 16, 2015 as to the transport, transfer, or sale of any alcoholic liquor from the relevant manufacturer of beer to any retailer if that prohibited ownership interest in the manufacturer of beer is not properly divested on January 1, 2015, subject to the State Commission's approval of the successive owner pursuant to the State Commission's authority provided in this Act. In addition, the State Commission shall find that the license of the manufacturer of beer that is subject to the prohibited ownership interest of a distributor or importing distributor is revoked on January 16, 2015 as to the transport, transfer, or sale of alcoholic liquor to the distributor or importing distributor if that ownership interest is not properly severed on January 1, 2015, subject to the State Commission's approval of the successive owner pursuant to the State Commission's authority provided in this Act.

The State Commission shall serve a copy of the order of non-compliance on the licensee and each person with an ownership interest in the licensee.

(h) If a person with a prohibited ownership interest in a licensee under subsection (b) or (c) of this Section succeeds in divesting itself of or severing that interest and obtains the State Commission's approval of the successive owner pursuant to its authority provided in this Act on or before January 1, 2015, then the State Commission shall enter an order finding that the licensee is in compliance, record the matter as closed, and serve a copy of the order of compliance on the licensee and each person with an ownership interest in the licensee.

If a person with a prohibited ownership interest in violation of subsection (b) or (c) of this Section fails to divest itself of or sever that interest and obtain the State Commission's approval of the successive owner pursuant to the State Commission's authority provided in this Act on or before January 1, 2015, then the State Commission shall, after notice and an opportunity for a hearing, revoke each licensee's license as specified in subsection (g) of this Section on January 16, 2015. The State Commission, when entering the order, shall give notice to the person by certified mail to cease and desist all shipments of alcoholic liquor into or within this State and to withdraw from this State within 5 working days after receipt of the notice all shipments of alcoholic liquor in transit. Whenever the State Commission has reason to believe that a person has failed to comply with the State Commission's notice under this Section, it shall notify the Department of Revenue and the Attorney General, and shall file a complaint with the State's Attorney of the county where the alcoholic liquor was delivered, or with appropriate law enforcement officials. Failure to comply with the notice issued by the State Commission under this Section is against the public interest and constitutes a business offense for which the person shall be fined not more than $5,000 for a first offense, not more than $10,000 for a second offense, and not more than $15,000 for a third or subsequent offense. Each shipment or transfer of alcoholic liquor in violation of the cease and desist notice shall constitute a separate offense.

(i) The power and authority granted to the State Commission under this Section is in addition to any existing power or authority the State Commission has under this Act and its exercise shall be accorded precedence on the State Commission's meeting agenda so as to fully accommodate the schedule for any proceeding under the provisions of this Section. Nothing in this Act shall be construed as limiting or otherwise impairing the ability of the State Commission to conduct future investigations and proceedings sua sponte or pursuant to a complaint to ensure compliance with this Section or paragraph (19) or (20) of subsection (a) of Section 6-2 of this Act. Any future investigations and proceedings shall be conducted by the State Commission on an expedited basis and pursuant to an initiating order entered by the State Commission. The State Commission shall enter its initiating order within 30 days after the receipt of a complaint. The initiating order shall set forth a schedule by which the required notices, disclosures, determinations, or orders specified in subsections (d), (e), (f), (g), and (h) shall be made or entered, and the period of time by which a licensee shall divest itself of or sever a prohibited ownership interest, which shall be no later than 540 days after the entry of the initiating order.

(j) Any association or non-profit corporation representing beer distributors in this State shall have standing to intervene and otherwise participate as a party in any proceeding undertaken by the State Commission under this Section to review and determine compliance or non-compliance with this Section.

(k) For purposes of this Section, the term "ownership interest" means a legal, equitable, or beneficial interest recognized under Illinois law. The term "prohibited ownership interest" means an ownership interest in a distributor, importing distributor, or manufacturer of beer as specified in this Section.

(Source: P.A. 98-21, eff. 6-13-13.)