COMMITTEES Banks Cities Consumer Affairs and Protection Environmental Conservation Steering

MICAH Z. KELLNER th 65 Assembly District

February 22, 2010 Hon. Andrew M. Cuomo Attorney General of New York The Capitol Albany, NY, 12224 VIA FACSIMILE: 518-474-4290 Dennis Rosen Chair, New York State Liquor Authority 80 South Swan Street, 9th Floor Albany NY 12210 VIA FACSIMILE: 518-402-4015 Dear Attorney General Cuomo and Chair Rosen: I am writing to urge the State Liquor Authority and the Office of the Attorney General to investigate the relationship between Diageo – the “world’s leading premium drinks business” according to their materials – and the Last Store on Main Street coalition. As the attached letter from Diageo to retailers shows, not only did this company give a large contribution to Last Store on Main Street last year and this year and pay for a rally held by liquor stores, but they also wrote to retailers describing these contributions in a way that may suggest an attempt to influence purchases: “I know we can count on your support for our industry [sic.] leading brands!” Paragraph (c) of subdivision 1 of section 101 of the Alcoholic Beverage Control law prohibits gifts and services from manufacturers and wholesalers to retailers which, in the judgment of the Authority, may tend to influence licensees to purchase the products of a manufacturer or wholesaler. Support for retail trade associations is allowed where such participation is in reasonable amounts and does not indicate an attempt to influence the purchase of products of contributing manufacturers and wholesalers by the members of the retail trade association. Diageo is not un-aware of this law. In October of 2006, former Attorney General Spitzer and former SLA Chairman Daniel Boyle announced an agreement to resolve an investigation of illegal marketing practices by 15 wine and liquor suppliers. Under this agreement, the OAG and SLA re-affirmed that incentives, financial and otherwise, are a violation of New York’s Alcohol Beverage Control law which explicitly prohibits manufacturers and wholesalers of wine and ▫ 834 Legislative Office Building, Albany, NY 12248  (518) 455-5676, FAX (518) 455-5282 ▫ 315 East 65 Street, New York, NY 10065  (212) 860-4906, FAX (917) 432-2983

liquor from providing such inducements. Under the agreement, suppliers must cease making such illegal inducements. One of the parties to the agreement was Diageo North America. While the law was amended in 2008 to provide a narrow exception to the prohibition for supporting “bona fide retailer trade association activities…where such participation is in reasonable amounts and does not reach proportions that indicate attempts to influence the purchase of products of contributing manufacturers and wholesalers by the members of such retailer associations,” it is unclear to me whether Diageo’s actions fit within this exception. Only an investigation by the SLA and the Office of the Attorney General can determine whether this activity was permissible pursuant to all relevant laws, and by the terms of the 2006 agreement. I call upon the OAG and the SLA to conduct such an investigation. Please do not hesitate to call me at 212-860-4906 if you wish to discuss this further. I appreciate your attention to this matter. Very truly yours,

Micah Z. Kellner Assembly Member