Tied House Law and Legal Definition

A tied house is a public house (pub) requiring a person to buy at least some of its beer from a particular brewery. Tied houses are illegal in the U.S. The Federal Alcohol Administration Act (Act) prohibits tied houses in the U.S. In the U.S., tied house restrictions are mainly construed for prohibiting any form of arbitrary management control in the alcoholic beverage industry. The Act prohibits tied house arrangements in order to prevent two particular dangers:

1.the ability and potentiality of large firms to dominate local markets through arbitrary management control; and

2. excessive sales of alcoholic beverages produced by overly aggressive marketing techniques of larger alcoholic beverage concerns.

In Dickerson v. Bailey, 336 F.3d 388, 397 (5th Cir. Tex. 2003), court held for the prohibition of tied house arrangements consisting of overlapping ownership of the manufacture, distribution, and retail sale of alcohol. It also prohibited manufacturers, distributors, or retailers from acquiring any financial interests in each other acquired from tied house arrangement.