Oooh busted! I'd heard that it was common practice in nightclubs to pay for placement on the top shelves but I don't think I knew that it was illegal.
Nearly all the top liquor companies got busted and fined for violating the "slotting fee" prohibition at Harrah's (through a third party). According to the TTB:
The allegations of tied house violations stem from the companies' participation in the 2008-2009 Harrah's Nationwide Beverage Program. The TTB investigation, which focused on activities in the Las Vegas area, alleges that the companies collectively furnished nearly $2 million in inducements through a third party to Harrah's Entertainment's hotel and casino subsidiary corporations during the two year period of the program. TTB alleges that the purpose of these inducements was to obtain preferential product display and shelf space (also known as slotting fees) at Harrah's Hotels and Casinos.
Payment of slotting fees by an alcohol beverage supplier to an alcohol beverage retailer is an unlawful marketing inducement which creates an artificial barrier to open and fair competition especially for small to medium-sized companies that cannot pay such fees.
As a part of the settlement agreements, each company denied violating any laws or regulations.
The companies and their offers in compromise are:
Diageo North America, Inc. - $650,000,
Pernod Ricard USA, LLC - $300,000,
Moet Hennessey USA, Inc. - $275,000,
Bacardi USA- $262,500,
Future Brands, LLC- $250,000, and
E. & J. Gallo Winery - $225,000.
This makes me wonder who the third party is...
More information from the Wall Street Journal:
Federal law dating to the post-Prohibition era prohibits makers of beer, wine or liquor from paying slotting fees to retailers and other outlets. The rules were designed to prevent anticompetitive practices that were seen by regulators as commonplace prior to Prohibition.
Food manufacturers are permitted to pay such fees to gain shelf space at supermarkets.
On one hand, the practice is sketchy. On the other hand, food brand owners get to do it so why should booze be any different?