BILL ANALYSIS S.B. 1236 By: Armbrister (Kuempel) 4-11-95 Committee Report (Amended) BACKGROUND Current law (Subchapters C and D of Chapter 102, Alcoholic Beverage Code) governs certain relationships between beer manufacturers and beer distributors by requiring manufacturers to designate territories in this state where distributors may distribute and sell brands produced by beer manufacturers. The law currently stipulates that beer manufacturers may enter into agreements with distributors which provide for exclusive territorial assignments. PURPOSE S.B. 1236 provides for the sale of beer within assigned territories. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 102.51(b), Alcoholic Beverage Code, to prohibit a manufacturer from assigning all or a part of the same sales territory to more than one distributor. SECTION 2. Amends Subchapter C, Chapter 102, Alcoholic Beverage Code, by adding Sections 102.54 and 102.55, as follows: Sec. 102.54. ADDITIONAL REQUIREMENTS FOR APPLICANTS FOR DISTRIBUTOR'S LICENSE. (a) Sets forth provisions the Texas Alcoholic Beverage Commission or administrator (commission) shall require an applicant for the license or a holder of the license to show, in addition to any other requirements necessary for the issuance or renewal of a distributor's license. (b) Sets forth provisions the commission or administrator may require the applicant or holder to show, in determining whether an applicant for or holder of a distributor's license meets the requirement of Subsection (a)(5). (c) Requires the commission or administrator to refuse to approve an application for a distributor's license or to refuse to renew a distributor's license if the commission or administrator finds the holder or applicant has failed to comply with any of the requirements of Subsection (a) or (b). (d) Defines "distributor," "manufacturer," and "retailer." Sec. 102.55. TERRITORIAL ASSIGNMENTS; DEFINITIONS. (a) Defines "brand" and "brand extension" as the terms relate to an agreement between a manufacturer and a distributor describing the sales territory in which a distributor may sell the beer of the manufacturer. (b) Provides that a brand extension is not a new or different brand. (c) Requires a manufacturer to assign a brand extension to the distributor to whom the brand was originally assigned, if the distributor to whom the brand was originally assigned, if the distributor elects to distribute a sell the brand extension. SECTION 3. (a) Provides that a territorial agreement in effect on March 22, 1995, between a manufacturer and a distributor in which a manufacturer has not assigned all or part of a territory to more than one distributor is considered to be an enforceable agreement requiring a manufacturer to not assign any part of the assigned territory to more than one distributor. (b) Provides that a territorial agreement in effect on March 22, 1995, in which a manufacturer has previously assigned all or part of the same sales territory to more than one distributor is not affected by the amendment to Section 102.51, Alcoholic Beverage Code, enacted by Section 1 of this Act. Provides that a territorial agreement in effect on March 22, 1995, in which a manufacturer has previously assigned all or part of the same sales territory to more than one distributor is governed by Section 102.51, Alcoholic Beverage Code. SECTION 4. Emergency clause. Effective date: upon passage. EXPLANATION OF AMENDMENTS Committee Amendment #1 amended SECTION 3 of the bill by striking the date "March 22, 1995" wherever it appears and inserting the date "April 11, 1995". SUMMARY OF COMMITTEE ACTION SB 1236 was heard in a Public Hearing on April 11, 1995. The Chair called up HB 2711 which was pending in committee. The Chair laid out SB 1236 which was the Senate companion to HB 2711. There was no objection. Rep. Kubiak offered a committee amendment to SB 1236, explained the amendment and moved adoption of committee amendment #1. There was no objection. Rep. Kubiak moved that the full committee adopt SB 1236 as amended, and that it be reported favorably to the full House with the recommendation that it do pass and be printed, and placed on the Local and Consent Calendar. The motion prevailed by the following vote: AYES: 7, NAYS: 0, ABSENT: 2. HB 2711 was left pending in committee.