TRENTON — New Jersey’s two largest wine and spirits wholesalers along with 20 retailers have agreed to pay $10.3 million to settle findings of discriminatory business practices, the state’s attorney general said Tuesday.
The two wholesalers will each pay a $4 million fine for their role in what he called an illegal scheme, while the retailers face $2.3 million in penalties, Attorney General Gurbir Grewal said in a statement. .
Allied Beverage Group and Fedway Associates together account for about 70% of the wine and 80% of the spirits sold wholesale in New Jersey.
Together, their sentence is the largest in the history of the Liquor Control Division, according to the attorney general’s statement. The Attorney General oversees the division.
Messages seeking comment were left for the companies.
Investigators found wholesalers were using an incentive program under the control of state beverage regulators to provide interest-free loans, credit extensions and other discriminatory practices to just 20 retailers in the state, according to Grewal. .
The incentive scheme aims to keep payments “relatively low” and prevents wholesalers from replacing interest-free loans, Grewal said.
Allied Beverage and Fedway have given some retailers an edge over smaller competitors by giving discounts more often and in larger quantities than allowed, authorities said.
“Retail incentives are a legitimate marketing tool as long as they are honest and available equally to all retailers. Discriminatory practices like these promote market instability by hurting small retailers,” James said. Graziano, acting director of the beverage control division.
Both companies said they would adopt a corrective action plan and hire a compliance monitor for two years, the attorney general said. They will also upgrade their IT systems and lay off some employees or seek to have them resign or retire.
The 20 retailers face fines ranging from $90,000 to $375,000, totaling $2.3 million.
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