By:  Armbrister                                       S.B. No. 1236
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to the sale of beer within assigned territories.
    1-2        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-3        SECTION 1.  Subsection (b), Section 102.51, Alcoholic
    1-4  Beverage Code, is amended to read as follows:
    1-5        (b)  Each holder of a general, local, or branch distributor's
    1-6  license shall enter into a written agreement with each manufacturer
    1-7  from which the distributor purchases beer for distribution and sale
    1-8  in this state setting forth the sales territory within which each
    1-9  brand of beer purchased by that distributor may be distributed and
   1-10  sold.  No holder of a general, local, or branch distributor's
   1-11  license shall make any sales of any brand of beer outside the sales
   1-12  territory specified in the written agreement.  No such agreement
   1-13  shall interfere with the rights of retailers to purchase beer as
   1-14  provided in Section 102.53.  A manufacturer may <agree to> not
   1-15  assign all or any part of the same sales territory to more than one
   1-16  distributor.  A copy of the agreement and any amendments to it
   1-17  shall be filed with the administrator.
   1-18        SECTION 2.  Subchapter C, Chapter 102, Alcoholic Beverage
   1-19  Code, is amended by adding Sections 102.54 and 102.55 to read as
   1-20  follows:
   1-21        Sec. 102.54.  ADDITIONAL REQUIREMENTS FOR APPLICANTS FOR
   1-22  DISTRIBUTOR'S LICENSE.  (a)  In addition to any other requirements
   1-23  necessary for issuance or renewal of a distributor's license, the
   1-24  commission or administrator shall require an applicant for a
    2-1  license or a holder of a license to show that the applicant or
    2-2  holder:
    2-3              (1)  has entered into or will acquire a written
    2-4  agreement designating an assigned territory from a manufacturer in
    2-5  accordance with this subchapter and Subchapter D;
    2-6              (2)  has received or has applied for and will maintain
    2-7  all licenses or permits required to engage in business in the
    2-8  assigned territory as a holder of a distributor's license,
    2-9  including any state or federal licenses or permits;
   2-10              (3)  has ordered, received, and stored or has committed
   2-11  to order, receive, and store a sufficient amount of beer that the
   2-12  distributor is authorized to sell to ensure that the distributor
   2-13  can supply the reasonable needs of all retailers in the assigned
   2-14  territory;
   2-15              (4)  has received and stored or has committed to
   2-16  receive and store beer received from a manufacturer in a manner
   2-17  complying with a product quality control standard established by
   2-18  the manufacturer or the commission; and
   2-19              (5)  has or will have the ability to sell, deliver, and
   2-20  promote each brand of beer sold by the distributor to all retailers
   2-21  in the assigned territory:
   2-22                    (A)  in a manner that complies with the product
   2-23  quality control standards of the manufacturer or of the commission;
   2-24  and
   2-25                    (B)  on a continuing and recurring basis in
   2-26  response to reasonable market demand for a brand of beer by the
   2-27  retailer or the retailer's customers in the assigned territory.
    3-1        (b)  In determining whether an applicant for or holder of a
    3-2  distributor's license meets the requirement of Subsection (a)(5),
    3-3  the commission or administrator may require the applicant or holder
    3-4  to show that the applicant or holder has or will have:
    3-5              (1)  storage facilities of a sufficient size to store
    3-6  each brand of beer in an amount equal to the demand for the product
    3-7  from all retailers in the holder's or applicant's assigned
    3-8  territory;
    3-9              (2)  an inventory or a commitment to acquire an
   3-10  inventory of each brand of beer in an amount equal to the demand
   3-11  for the brand from all retailers in the holder's or applicant's
   3-12  assigned territory;
   3-13              (3)  a sufficient number of employees to provide the
   3-14  holder or applicant with the ability:
   3-15                    (A)  to sell, deliver on a reasonably prompt
   3-16  basis, and promote each brand of beer to all retailers in the
   3-17  holder's or applicant's assigned territory; and
   3-18                    (B)  to prepare and submit in a timely manner any
   3-19  fee or tax payments or reports required by any authorized
   3-20  governmental regulatory authority, including the Bureau of Alcohol,
   3-21  Tobacco, and Firearms and the commission; and
   3-22              (4)  a sufficient number of delivery vehicles and
   3-23  rolling stock to provide the holder or the applicant with the
   3-24  capability of transporting, selling, delivering, or promoting each
   3-25  brand of beer to all retailers in the assigned territory.
   3-26        (c)  The commission or administrator shall refuse to approve
   3-27  an application for a distributor's license or shall refuse to renew
    4-1  a distributor's license if the commission or administrator finds
    4-2  the holder or applicant has failed to comply with any of the
    4-3  requirements of Subsection (a) or (b).
    4-4        (d)  In this section:
    4-5              (1)  "Distributor" means a person who holds a license
    4-6  issued under Chapter 64 or 65.
    4-7              (2)  "Manufacturer" means a person who holds a license
    4-8  issued under Chapter 62 or 63.
    4-9              (3)  "Retailer" means a person who holds a permit or
   4-10  license issued under Chapter 25 through 34, 48, 69 through 72, or
   4-11  74.
   4-12        Sec. 102.55.  TERRITORIAL ASSIGNMENTS; DEFINITIONS.  (a)  In
   4-13  this subchapter and Subchapter D, and as the terms relate to an
   4-14  agreement between a manufacturer and a distributor describing the
   4-15  sales territory in which a distributor may sell the beer of a
   4-16  manufacturer:
   4-17              (1)  "Brand" means any word, name, group of letters,
   4-18  symbol, or trademark or a combination of any word, name, group of
   4-19  letters, symbol, or trademark that is adopted and used by a
   4-20  manufacturer on a label or on packaging to identify a specific beer
   4-21  or malt beverage and to distinguish the beer or malt beverage
   4-22  product from the label or packaging of another beer or malt
   4-23  beverage produced or marketed by any manufacturer.  The term does
   4-24  not include the name of the manufacturer unless the name of the
   4-25  manufacturer is included in the name of the brand.
   4-26              (2)  "Brand extension" means a brand that incorporates
   4-27  a brand name or brand logo, or a substantial part of an existing
    5-1  brand name or brand logo, of the same manufacturer.
    5-2        (b)  A brand extension is not a new or different brand.
    5-3        (c)  A manufacturer shall assign a brand extension to the
    5-4  distributor to whom the brand was originally assigned, if the
    5-5  distributor elects to distribute and sell the brand extension.
    5-6        SECTION 3.  (a)  A territorial agreement in effect on March
    5-7  22, 1995, between a manufacturer and a distributor in which a
    5-8  manufacturer has not assigned all or part of a territory to more
    5-9  than one distributor is considered to be an enforceable agreement
   5-10  requiring a manufacturer to not assign any part of the assigned
   5-11  territory to more than one distributor.
   5-12        (b)  A territorial agreement in effect on March 22, 1995, in
   5-13  which a manufacturer has previously assigned all or part of the
   5-14  same sales territory to more than one distributor is not affected
   5-15  by the amendment to Section 102.51, Alcoholic Beverage Code,
   5-16  enacted by Section 1 of this Act.  A territorial agreement in
   5-17  effect on March 22, 1995, in which a manufacturer has previously
   5-18  assigned all or part of the same sales territory to more than one
   5-19  distributor is governed by Section 102.51, Alcoholic Beverage Code,
   5-20  as it existed immediately before the effective date of this Act,
   5-21  and the former law is continued in effect for that purpose.
   5-22        SECTION 4.  The importance of this legislation and the
   5-23  crowded condition of the calendars in both houses create an
   5-24  emergency and an imperative public necessity that the
   5-25  constitutional rule requiring bills to be read on three several
   5-26  days in each house be suspended, and this rule is hereby suspended,
   5-27  and that this Act take effect and be in force from and after its
    6-1  passage, and it is so enacted.
    6-2                       COMMITTEE AMENDMENT NO. 1
    6-3        Amend S.B. No. 1236 as follows:
    6-4        In SECTION 3 of the bill, STRIKE the date "March 22, 1995"
    6-5  wherever it appears and insert, in lieu thereof, the date "April
    6-6  11, 1995".
    6-7                                                               Kubiak