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ing temperance and moderation and for best serving the public interest, convenience and advantage. (b) As used in this section

“(1) The term 'cost to the retailer' shall mean the invoice cost of the alcoholic beverage to the retailer, or the replacement cost of the alcoholic beverage to the retailer within thirty days prior to the date of sale, in the quantity last purchased, whichever is lower, less all trade discounts; to which shall be added (A) freight charges not otherwise included in the cost of the alcoholic beverage; (B) cartage to retail outlet if done or paid for by the retailer, which cartage cost shall be deemed to be three-fourths of 1 per centum of the cost of the alcoholic beverage to the retailer as herein defined, unless said retailer claims and proves a lower cartage cost; and (C) a markup to cover the cost of doing business.

“(2) The term 'cost to the wholesaler shall mean the invoice cost of the alcholic beverage to the wholesaler, or the replacement cost of the alcoholic beverage to the wholesaler within thirty days prior to date of sale, in the quantity last purchased, whichever is lower, less all trade discounts; to which shall be added (A) freight charges not otherwise included in the cost of the alcoholic beverage, and (B) cartage to the retail outlet if done and paid for by the wholesaler, which cartage cost shall be deemed to be threefourths of 1 per centum of the cost of the alcoholic beverage to the wholesaler as herein defined. unless said wholesaler claims and proves a lower cartage cost.

“(3) The terms ‘sell at retail', 'sales at retail', and 'retail sale' shall mean and include any transfer for a valuable consideration, made in the ordinary course of trade or in the usual prosecution of the seller's business, of title to an alcoholic beverage to the purchaser for consumption or use other than resale or further processing or manufacturing, and shall include any transfer of such alcoholic beverage where title is retained by the seller as security for the payment of such purchase price.

“(4) The terms 'sell at wholesale', 'sales at wholesale', and 'wholesale sales' shall mean and include any transfer for a valuable consideration made in the ordinary course of trade or the usual prosecution of the seller's business, of title to an alcoholic beverage to the purchaser for purposes of resale or further processing or manufacturing, and shall include any such transfer of an alcoholic beverage where title is retained by the seller as security for the payment of the purchase price.

"15) The term 'retailer shall mean and include every person engaged in the business of making sales of alcoholic beverages at retail within the District licensed under this Act.

“(6) The term 'wholesaler shall mean and include every person engaged in the business of making sales of alcoholic beverages at wholesale within

the District licensed under this Act. "(c) It is hereby declared that knowingly to advertise, to offer to sell, or to sell any alcoholic beverage, either by retailers or wholesalers, at less than cost as defined in this section, with the intent, effect, or the result of deceiving any purchaser or prospective purchaser, substantially lessening competition, unreasonably restraining trade, or tending to create a monopoly is an unfair method of competition, contrary to public policy, and in contravention of the policy of this section.

"(d) Any retailer who shall knowingly, in contravention of the policy of this section, advertise, offer to sell, or sell at retail any alcoholic beverage at less than cost to the retailer as defined in this section; or any wholesaler who shall, in contravention of the policy of this section, advertise, offer to sell, or sell at wholesale any alcoholic beverage at less than cost to the wholesaler as defined in this section, may have his license suspended or revoked after due notice and hearing by the Board, with right of review by the Commissioners, in accordance with the provisions of this Act. Proof of any such advertisement, offer to sell, or sale by any retailer or wholesaler in contrarention of the policy of this section shall be prima facie evidence of a violation of this section.

“(e) In addition to the penalties provided in this section, the courts of the District are hereby invested with jurisdiction to prevent and restrain violations of this section, and it shall be the duty of the corporation counsel to institute proceedings in equity to prevent and restrain violations. Any person shall be entitled to sue for and have injunctive relief in any court of competent jurisdiction against any threatened loss or injury by reason of a violation of this section. (f) The provisions of this section shall not apply to sales at retail or sales at wholesale (1) where the alcoholic beverage is sold in bona fide clearance sales, if advertised, marked, and sold as such; (2) where the alcoholic beverage is imperfect or damaged, or is being discontinued, and is advertised, marked, and sold as such; (3) where the alcoholic beverage is sold upon the final liquidation of any business ; (4) where the alcoholic beverage is sold for charitable purposes or to relief agencies; (5) where the alcoholic beverage is sold on contract to departments of governments or governmental institutions; (6) where the price of the alcoholic beverage is made in good faith to meet lawful competition; (7) where sales are made by one wholesaler to another wholesaler or by one retailer to another retailer for the purpose of accommodation; (8) where the alcoholic beverage is sold by an officer acting under the order or direction of any court or by any fiduciary, or by any trustee in a deed of trust or deed of assignment for the benefit of creditors.

“(g) Any retailer who applies to the Board and who shows proof satisfactory to the Board of the need therefor, or of special circumstances requiring such a permit, may receive a permit to make a sale or sales under cost without regard to this section.

"SEC. 39. Nothing in this Act shall be construed as repealing any portion of section 7 of the District of Columbia Appropriation Act for the fiscal year ending June 30, 1903, approved July 1, 1902, as amended. Nothing in this Act shall be construed to divest the Federal Trade Commission or the United States Department of Justice of any jurisdiction now or hereafter vested in them as to any of the provisions of this Act."

Sec. 2. Nothing in Reorganization Plan Numbered 5, 1952 (66 Stat. 824), or in any other provision of law shall authorize the Board of Commissioners of the District of Columbia to delegate, divest, or otherwise affect any authority vested in the Alcoholic Beverage Control Board by the amendment made by the first section of this Act. The performance of any function vested in the Board of Commissioners or in any officer or agency under the jurisdiction or control of the Board of Commissioners by the amendment made by the first section of this Act may be delegated by the Board of Commissioners in accordance with section 3 of such reorganization plan.

SEC. 3. Nothing in the amendment made by the first section of this Act shall be construed to terminate the Alcoholic Beverage Control Board in existence on the date of enactment of this Act, and the members of such Board shall continue in office for the terms for which they were appointed.

SEC. 4. Section 18 of the Act entitled "An Act to amend the District of Columbia Alcoholic Beverage Control Act”, approved August 27, 1935 (49 Stat. 903), is hereby repealed.

SEC. 5. Subsection (e) of section 7 of the Act entitled "An Act to consolidate the Police Court of the District of Columbia and the Municipal Court of the District of Columbia, to be known as 'The Municipal Court for the District of Columbia', to create “The Municipal Court of Appeals for the District of Columbia', and for other purposes”, approved April 1, 1942, as amended (D.C. Code, sec. 11-772), is amended by striking out "and" at the end of paragraph (8), by striking out the period at the end of paragraph (9), and inserting in lieu thereof "; and” and by adding at the end thereof the following new paragraph :

"(10) Any decision of the Commissioners of the District of Columbia revoking or suspending a license issued under the District of Columbia Alcoholic

Beverage Control Act." SEC. 6. This Act shall take effect on the one hundred and twentieth day after the date of its enactment or upon such earlier date as the Board of Commissioners of the District of Columbia shall prescribe.

Mr. MULTER. These bills were before the comittee last year. H.R. 2036 is substantially the same as it was introduced and considered and reported by the subcommittee to the full committee last year.

In the interest of saving time, I would suggest that any and all witnesses who testified for or against the bill last year and who have not changed their position, when they are called indicate that, file their complete statement, and then indicate what new matter, if any, they desire to present to the committee.

With that brief introduction, I think we are ready for hearing the witnesses.

I think we might start with the representative of the Commissioners of the District of Columbia, Mr. Kneipp, Assistant Corporation Counsel.

I will make part of the record at this point the letter of June 6, 1963, from the Commissioners over the signature of Walter N. Tobriner, President of the Board of Commissioners, in which, having previously stated they were unable to be here, they indicate that Mr. Kneipp will present their views at this hearing. (The letter referred to follows:) GOVERNMENT OF THE DISTRICT OF COLUMBIA,

EXECUTIVE OFFICE,

Washington, D.C., June 6, 1963. Hon. John L. MCMILLAN, Chairman, Committee on the District of Columbia, House of Representatives, Washington, D.C.

DEAR MR. MCMILLAN : Reference is made to your letter of May 16, 1963, informing me of the hearing scheduled for June 11 by Subcommittee No. 3 of your committee, for the purpose of considering H.R. 680, H.R. 684, and H.R. 2036. You extended me an invitation to present the views of the Commissioners on these bills, or to designate a representative of the Commissioners for this purpose, and you asked that the Commissioners furnish the committee with copies of their report on each of the three bills, in advance of the hearing, if possible.

The Commisioners have designated Robert F. Kneipp, Esq., Assistant Corporation Counsel, to present their views at the hearing scheduled for June 11. Further, they have asked the Corporation Counsel to take appropriate action to see that their proposed reports on H.R. 680, H.R. 684, and H.R. 2036, presently being considered by the Bureau of the Budget, are forwarded to the committee at the earliest possible date. Sincerely yours,

WALTER N. TOBRINER, President, Board of Commissioners, District of Columbia,

JUNE 7, 1963. Hon. John L. MCMILLAN, Chairman, Committee on the District of Columbia, House of Representatives, Washington, D.C.

MY DEAR MR. MCMILLAN : The Commissioners of the District of Columbia have for report H.R. 684, 88th Congress, a bill to amend the District of Columbia Alcoholic Beverage Control Act to prohibit false advertising in the District of Columbia relating to alcoholic beverages.

H.R. 684 adds at the end of the District of Columbia Alcoholic Beverage Control Act a new section 42, prohibiting false advertising in the District of Columbia relating to alcoholic beverages. The Commissioners question the need for any such provision.

Section 1 of the act of May 29, 1916 (39 Stat. 165 ; sec. 22–1411, D.C. Code, 1961 edition) prohibits the use in virtually any manner of—"any false, untrue, or misleading statement, representation, or advertisement with intent to sell, barter, or exchange any goods, wares, or merchandise * * *."

The penalty for the violation of the prohibition against false advertising as established by such act of May 29, 1916, is a fine of not more than $100 or imprisonment for not more than 60 days.

Moreover, section 2-107 of the alcoholic beverage control regulations prohibits false, misleading, or disparaging advertising, while section 33 of the Alcoholic Beverage Control Act provides that a violation of the regulations promulgated pursuant to the act shall be punished by a fine of not more than $1,000 or by imprisonment for not longer than 1 year or by both such fine and imprisonment in the discretion of the court, and section 17 of such act provides for the revocation or suspension of the license issued a licensee, for, among other things, violation of any of the provisions of existing law or any of the rules or regulations promulgated pursuant thereto. In view of the foregoing, the Commissioners fail to understand the need for the new section 42, since it appears to add nothing to the proscriptions in existing law and in the alcoholic beverage control regulations.

For the foregoing reason, the Commissioners object to the enactment of H.R. 684.

The Commissioners have been advised by the Bureau of the Budget that, from the standpoint of the administration's program, there is no objection to the submission of this report to the Congress. Yours very sincerely,

WALTER N. TOBRINER,
President, Board of Commissioners,

District of Columbia. Mr. MULTER. Mr. Kneipp, you may proceed.

Mr. KNEIPP. Yes, Mr. Chairman. STATEMENT OF ROBERT F. KNEIPP, ASSISTANT CORPORATION

COUNSEL, REPRESENTING THE BOARD OF COMMISSIONERS OF THE DISTRICT OF COLUMBIA

Mr. KNEIPP. Mr. Chairman, I am Robert F. Kneipp, Assistant Corporation Counsel for the District of Columbia, representing the Commissioners of the District of Columbia.

Mr. Chairman, would you wish me to proceed first with H.R. 684 or with H.R. 2036 ?

Mr. MULTER. Suit your own convenience.
Mr. KNEIPP. All right, sir. I will proceed with H.R. 684.

The Commissioners have reported to the committee that they are opposed to the enactment of H.R. 684, primarily as being unnecessary.

Under existing law, section 1 of the act of May 29, 1916, there is a prohibition against"false, untrue, or misleading statements, representations or advertisements with intent to sell, barter, or exchange any goods, wares, or merchandise * * *." They think that that prohibition of existing law is sufficient to take care of the problem that would be handled by H.R. 784, and, in addition, there is a provision in section 2–107 of the regulations, alcoholic beverage control regulations, which prohibits "false, deceiving, or disparaging advertising," among other things.

There is provision in the act for the suspension of licenses, for violations of either the regulations or of law. And accordingly, as far as H.R. 684 is concerned, the Commissioners feel that there is no necessity for the enactment of that bill.

If there are no questions, Mr. Chairman, I will proceed to H.R 2036.

Mr. MULTER. Well, with reference to that bill, the testimony before the committee during the last session with reference to this same provision was that, even though those provisions were in the statute as pointed out by you, the testimony also showed that the ABC Board had taken no action at any time under that section, and that the Corporation Counsel and the U.S. attorney had taken no action under that section; and that the matters of complaints with reference to false advertising were constantly shuttled back and forth without a single prosecution either in the Board or in any of the other agencies of Government.

Now, can you furnish the committee with any instances of any prosecutions, of the processing of complaints for false advertising, either before the ABC Board, by the Corporation Counsel, or by the U.S. attorney?

Mr. KNEIPP. There have been no prosecutions in the last 5 years for false advertising by ABC licensees, and there have been no citations in the past 5 years for false advertising by agency licensees.

The problem here, Mr. Chairman, is whether H.R. 684 would add anything. If there are no prosecutions under existing law, what reason is there to believe that there would be prosecutinos under H.R. 684?

Mr. MULTER. Because the testimony, if I recall it correctly, of the ABC Board before the last Congress was that there was opinion or legal advice given to them that they had no right to entertain these applications or complaints under this section for false advertising.

While there was some dispute as to whether or not there was any false advertising, I think the record is replete that there was false advertising and continual false advertising in this industry, and yet nothing done by anybody to stop it.

If this act or this proposed bill, H.R. 684, is not sufficient to give them authority to do it, I think you as the Corporation Counsel ought to indicate to us what should be done, how the statute should be changed so as to stop false advertising.

Mr. KNEIPP. Mr. Chairman, the position of the Commissioners is that there is sufficient authority in existing law, which is, incidentally, prosecuted by the U.S. attorney, to handle cases of false advertising

Mr. MULTER. Can you tell us why the ABC Board does not process complaints against false advertising?

Mr. SCHWENGEL, Mr. Chairman, I am sorry to interrupt you-
Mr. MULTER. Surely.
Mr. SCHWENGEL. I am sorry I did not get around in time.

I want to, in behalf of Mr. Springer, who could not be here, who has given this matter a lot of thought, evidently, make the following request, if I may.

Mr. MULTER. Surely.

Mr. SCHWENGEL. On behalf of Mr. Springer, that S. 852, introduced by Senator Bible, which incorporates the Commissioners' amendments for the District of Columbia alcoholic beverage control law, be considered along with the two bills already scheduled.

Mr. MULTER. Do we have copies of those two bills!
The CLERK. Yes.

Mr. MULTER. Without objection, we will consider S. 852 at the same time we consider the other bills.

Mr. SCHWENGEL. Thank you.
Mr. MULTER. Yes, sir.
(S. 852 follows:)

(S. 852, 88th Cong., 1st sess. ] A BILL To amend the District of Columbia Alcoholic Beverage Control Act Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (c) of section 3 of the District of Columbia Alcoholic Beverage Control Act approved January 24, 1934 (48 Stat. 319), as amended (sec. 25–103(c), D.C. Code, 1961 edition), is amended by striking “, other than champagne".

SEC. 2. Subsections (j) and (n) of section 3 of such Act approved January 24, 1934 (sec. 25–103(j) and (n), D.C. Code, 1961 edition), are amended by striking "the chief source or revenue" and inserting in lieu thereof “a substantial source of the revenue".

Sec. 3. Section 7 of such Act approved January 24, 1934 (sec. 25-107, D.C. Code, 1961 edition), is amended by striking so much thereof as reads "to prescribe the hours during which beverages may be sold and to forbid the sale on

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