Request By:
Mr. Vic Hellard, Jr., Director
Legislative Research Commission
Capitol Building
Frankfort, Kentucky 40601
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Suzanne Guss, Assistant Attorney General
This is in reply to your recent request for an opinion of this office as to whether a difference in prices charged by brewers of malt beverages to wholesale distributors of malt beverages throughout the state violates KRS 365.020(1). You have stated in your letter that data obtained by the Interim Joint Committee on Business Organizations and Professions indicates that brewers are charging substantially lower prices to distributors in the Richmond area as opposed to brewers in the Louisville-Lexington area.
KRS 365.020(1) prohibits any person doing business in this state and engaged in the production, manufacture or distribution of any product from selling such product at a lower rate in one section, community or city than in another. However, the scienter requirement set forth in the statute requires this activity to be conducted "with the intent to destroy the competition of any regular established dealer, or to prevent the competition of any person who in good faith intends and attempts to become such dealer. . . ." Id. In the absence of proof establishing this intention, the statute is not violated.
Belfry Coal Corp. v. East Kentucky Beverage Corporation, Ky., 294 S.W.2d 539 (1956). Additionally, the statute is not violated where the difference in price is due to a difference in the grade or quality of the product or the cost of transportation to the various communities. KRS 365.020(1).
From the facts presented in your letter, it is not possible for this office to determine whether the necessary intent is present to constitute a violation of the statute.
The penalty for violation of the statute is set forth in KRS 365.990(2) which provides that the offender shall be fined not less than one hundred dollars nor more than one thousand dollars, or imprisoned for not more than six months, or both. Since violation of the statute constitutes a criminal offense, injunctive relief is unavailable unless the activity complained of constitutes a public nuisance.