Comptroller Finds No Issues With Liquor Deal; Wholesaler Cleared In Investigation

SNOW HILL — The state Comptroller’s Office Field Enforcement Division this week opined a major liquor wholesaler in Maryland did not engage in unfair trade practices and false advertising when Worcester’s Department of Liquor Control (DLC) locked into a deep discount price on a particular product in April only to see the price fall farther later in the summer.

In August, Worcester County officials requested a state investigation into alleged unfair trade practices and false advertising by Reliable-Churchill after making a large purchase in April on what the DLC believed was a locked in, one-time deal. According to the letter, the DLC purchased 400 cases or Captain Morgan at an advertised sale price of $12.79 per bottle based on the representation by Reliable that the sale price would be locked in until October.

However, in July, Reliable issued another sale flier advertising Captain Morgan at a sale price of $9.99 per bottle, or nearly $3 less per bottle than the price the DLC purchased 400 cases in April under the assumption the price was fixed until October. Based on the assumption the $12.79 per bottle price was as good as it was going to get until at least October, the DLC purchased the 400 cases needed to meet the demands of its wholesale and retail operations for the summer season, only to see the $9.99 price offered in July.

For that reason, the DLC alleged it was purposely misled into making the 400-case purchase in April and sought a rebate of roughly $8,300, or the difference between the $12.79 price and the $9.99 price. When Reliable tacitly denied any hints of unfair trade practices and false advertising by not remitting the $8,300 rebate, the DLC, through Worcester County Attorney Sonny Bloxom, in late August requested the Comptroller’s Field Enforcement Division to conduct an investigation.

“The county feels that Reliable deliberately misled it to get the DLC to purchase a large amount of the product at a higher price, knowing that later in the summer, Reliable would dramatically drop the price, therefore putting the county in an uncompetitive market position,” Bloxom’s letter to Field Enforcement Division Director Jeffrey Kelly read. “This is a blatant violation of the laws and regulations regarding alcoholic beverage advertising and sales.”

After weeks of careful review and investigation, Kelly and the state Comptroller’s Office Field Enforcement Division this week issued a ruling exonerating Reliable and dismissing the DLC’s allegations. Kelly informed Bloxom of the results of the investigation in a letter sent on Monday.

“As our investigation has drawn to a close, I am reporting to you that there is no evidence to support your allegations,” the letter reads.

The Comptroller’s investigation agreed Reliable’s price sheet did state the $12.79 price would likely be locked in until October, but the DLC failed to mention the price was set for a five-case minimum order and left out the key word “projected” in its allegation.

“Your aspersion that Reliable ‘deliberately misled’ the DLC does not make sense,” Kelly’s letter reads. “For that to be true, presumably, Reliable would had to have been willing to trick or entice accounts statewide into the making the April purchase only to hurt them with the further price reduction in July and August all for the purpose of placing the DLC in an ‘uncompetitive market position’.”

Kelly’s investigation pointed out the DLC does a significant amount of business with Reliable, but not at a level that the company would be willing to jeopardize its other accounts across Maryland.

“Admittedly, the DLC is a large purchaser, but it accounts for less than two percent of Reliable’s statewide sales and so, it seems, hardly warrants jeopardizing the other 98 percent of Reliable’s business across Maryland in an attempt to adversely impact the DLC.”

Kelly’s investigation also debunked the idea Reliable offered its $9.99 sale price for a 10-case purchase only to a few select retailers.

“This assertion is wholly inaccurate,” the letter reads. “Our investigation has shown that 253 retailers in Maryland took advantage of the discounted offer, including the DLC,” the letter reads. “Further, there is evidence that dozens of Worcester County retailers were provided information on the 10-case discounted offer and eight purchased the product at the discount.”

Kelly said in the letter the investigation included interviews with DLC Director Bobby Cowger, Reliable executives, and several Worcester County retailers along with a review of reams of invoices, emails and other pertinent documents.

“Please be assured that pursuant to your assertions and request, our office conducted a thorough and complete investigation,” the letter reads. “However, contrary to your allegations, we did not discover any evidence that Reliable acted in an illegal or improper manner.”

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