INDUSTRY NOTICE: Avoiding tier violations when using B2B e-commerce platforms

To: TABC-licensed and -permitted distributors, wholesalers, retailers, and stakeholders

Re: Avoiding tier violations when using B2B e-commerce platforms

TABC is aware that multiple business-to-business (B2B) e-commerce platforms have entered the Texas market, and some retailers are using these platforms to place or facilitate their alcoholic beverage orders with distributors and wholesalers. The agency is also aware that some distributors and wholesalers have contracted with e-commerce platforms to serve as one of the wholesaler’s or distributor’s designated ordering platforms.

This is a significant development in Texas’s alcoholic beverage industry, so I want to take this opportunity to stress to all interested parties that TABC still enforces a strict separation between the manufacturing, wholesaling, and retailing levels of the industry. Members of the industry remain free to run their respective businesses as they see fit, within the confines of the law; however, a member of one tier of the industry may not manage or control the business or interests of a member of another tier. To that point, if a retailer attempted to force a distributor or wholesaler to use or accept orders from a particular e-commerce platform, that may constitute a violation of the Alcoholic Beverage Code (“Code”). TABC will investigate such allegations for potential enforcement action.

While e-commerce platform operators are generally not licensed by TABC, they must still abide by the Code. If a platform operator changes, redirects, or otherwise interferes with the fulfillment of an alcoholic beverage order placed by a retailer, TABC will investigate to determine if a violation occurred.

TABC’s goal is to provide a healthy regulatory environment for the Texas alcoholic beverage industry to ensure public safety while also supporting businesses. The emergence of e-commerce platforms does not change that goal, and we will closely monitor how these platforms operate to help ensure the health of the industry and the safety of Texans.

If you have questions regarding this letter, please contact TABC in writing at P.O. Box 13127, Austin, TX 78711; by email at marketing.practices@tabc.texas.gov; or by phone at 512-206-3411.

Sincerely,

Thomas W. Graham

Executive Director