CHAPTER 2. CIGARETTE FAIR TRADE ACT

IC 24-3-2
    Chapter 2. Cigarette Fair Trade Act

IC 24-3-2-1
Declaration of policy
    Sec. 1. It is declared to be the public policy of this state topromote the public welfare by making unlawful unfair, dishonest,deceptive, destructive and fraudulent business practices now existingin transactions involving the sale of, offer to sell, or inducement tosell cigarettes in this state in wholesale and retail trades. The offeringfor sale or sale of cigarettes below cost in the retail or wholesaletrade with the intent of injuring competitors or destroying orsubstantially lessening competition is an unfair and deceptivebusiness practice and adversely affects the collection of revenue duethis state from the sale of cigarettes.
(Formerly: Acts 1949, c.51, s.1.)

IC 24-3-2-2
Definitions
    Sec. 2. Unless the context in this chapter requires otherwise, theterm:
    (a) "Cigarette" shall mean and include any roll for smoking madewholly or in part of tobacco, irrespective of size or shape andirrespective of tobacco being flavored, adulterated, or mixed withany other ingredient, where such roll has a wrapper or cover made ofpaper or any other material; provided the definition in this paragraphshall not be construed to include cigars.
    (b) "Person" or the term "company", used in this chapterinterchangeably, means and includes any individual, assignee,receiver, commissioner, fiduciary, trustee, executor, administrator,institution, bank, consignee, firm, partnership, limited liabilitycompany, joint vendor, pool, syndicate, bureau, association,cooperative association, society, club, fraternity, sorority, lodge,corporation, municipal corporation, or other political subdivision ofthe state engaged in private or proprietary activities or business,estate, trust, or any other group or combination acting as a unit, andthe plural as well as the singular number, unless the intention to givea more limited meaning is disclosed by the context.
    (c) "Distributor" shall mean and include every person who sells,barters, exchanges, or distributes cigarettes in the state of Indiana toretail dealers for the purpose of resale, or who purchases for resalecigarettes from a manufacturer of cigarettes or from a wholesaler,jobber, or distributor outside the state of Indiana who is not adistributor holding a registration certificate issued under theprovisions of IC 6-7-1.
    (d) "Retailer" shall mean every person, other than a distributor,who purchases, sells, offers for sale, or distributes cigarettes toconsumers or to any person for any purpose other than resale,irrespective of quantity or amount or the number of sales.
    (e) "Sell at retail", "sale at retail", and "retail sales" shall mean

and include any transfer of title to cigarettes for a valuableconsideration made in the ordinary course of trade or usual conductof the seller's business to the purchaser for consummation or use.
    (f) "Sell at wholesale", "sale at wholesale", and "wholesale sales"shall mean and include any transfer of title to cigarettes for avaluable consideration made in the ordinary course of trade or usualconduct of a distributor's business.
    (g) "Basic cost of cigarettes" shall mean the invoice cost ofcigarettes to the retailer or distributor, as the case may be, or thereplacement cost of cigarettes to the retailer or distributor, as the casemay be, within thirty (30) days prior to the date of sale, in thequantity last purchased, whichever is the lower, less all tradediscounts and customary discounts for cash, plus the cost at full facevalue of any stamps which may be required by IC 6-7-1, if notincluded by the manufacturer in his selling price to the distributor.
    (h) "Department" shall mean the alcohol and tobacco commissionor its duly authorized assistants and employees.
    (i) "Cost to the retailer" shall mean the basic cost of cigarettes tothe retailer, plus the cost of doing business by the retailer asevidenced by the standards and methods of accounting regularlyemployed by him in his allocation of overhead costs and expensespaid or incurred and must include without limitation labor (includingsalaries of executives and officers), rent, depreciation, selling costs,maintenance of equipment, delivery costs, all types of licenses, taxes,insurance, and advertising; however, any retailer who, in connectionwith the retailer's purchase, receives not only the discounts ordinarilyallowed upon purchases by a retailer, but also, in whole or in part,discounts ordinarily allowed on purchases by a distributor shall, indetermining costs to the retailer pursuant to this section, add the costto the distributor, as defined in paragraph (j), to the basic cost ofcigarettes to said retailer as well as the cost of doing business by theretailer. In the absence of proof of a lesser or higher cost of doingbusiness by the retailer making the sale, the cost of doing business bythe retailer shall be presumed to be eight percent (8%) of the basiccost of cigarettes to the retailer. In the absence of proof of a lesser orhigher cost of doing business, the cost of doing business by theretailer, who in connection with the retailer's purchase receives notonly the discounts ordinarily allowed upon purchases by a retailer,but also, in whole or in part, the discounts ordinarily allowed uponpurchases by a distributor, shall be presumed to be eight percent(8%) of the sum of the basic cost of cigarettes plus the cost of doingbusiness by the distributor.
    (j) "Cost to the distributor" shall mean the basic cost of cigarettesto the distributor, plus the cost of doing business by the distributoras evidenced by the standards and methods of accounting regularlyemployed by him in his allocation of overhead costs and expenses,paid or incurred, and must include without limitation labor costs(including salaries of executives and officers), rent, depreciation,selling costs, maintenance of equipment, delivery costs, all types oflicenses, taxes, insurance, and advertising. In the absence of proof of

a lesser or higher cost of doing business by the distributor making thesale, the cost of doing business by the wholesaler shall be presumedto be four percent (4%) of the basic cost of cigarettes to thedistributor, plus cartage to the retail outlet, if performed or paid forby the distributor, which cartage cost, in the absence of proof of alesser or higher cost, shall be deemed to be one-half of one percent(0.5%) of the basic cost of cigarettes to the distributor.
    (k) "Registration certificate" refers to the registration certificateissued to cigarette distributors by the department of state revenueunder IC 6-7-1-16.
(Formerly: Acts 1949, c.51, s.2.) As amended by P.L.152-1986,SEC.35; P.L.8-1993, SEC.344; P.L.204-2001, SEC.61;P.L.252-2003, SEC.12.

IC 24-3-2-3
Sale at less than cost; penalty
    Sec. 3. (a) It is a Class A infraction for a retailer or distributor,with intent to injure competitors or destroy or substantially lessencompetition, to offer to sell or sell at retail or wholesale cigarettes atless than the cost to him. The registration certificate held by such adistributor under IC 6-7-1 may be revoked by the department for thebalance of the term thereof.
    (b) Evidence of offering to sell or sale of cigarettes by any retaileror distributor at less than the cost to him is prima facie evidence ofintent to injure competitors and to destroy or substantially lessencompetition.
    (c) Notwithstanding IC 34-28-5-5(c), a judgment for a violationof this section shall be deposited in the enforcement andadministration fund established under IC 7.1-4-10-1.
(Formerly: Acts 1949, c.51, s.3.) As amended by Acts 1978, P.L.2,SEC.2408; P.L.252-2003, SEC.13.

IC 24-3-2-4
Sale of multiple items at combined price
    Sec. 4. In all offers for sale or sales involving two (2) or moreitems, at least one (1) of which items is cigarettes, at a combinedprice, and in all offers for sale or sales, involving the giving of anygift or concession of any kind whatsoever (whether it be coupons orotherwise), the retailer's or distributor's combined selling price shallnot be below the cost to the retailer or the cost to the distributor,irrespective of the total of all articles, products, commodities, giftsand concessions included in such transactions.
(Formerly: Acts 1949, c.51, s.4.)

IC 24-3-2-4.7
Failure to provide documentary evidence of distributor; penalty;seizure of cigarettes or other tobacco products
    Sec. 4.7. (a) A retailer shall produce an invoice or otherdocumentary evidence proving that the retailer obtained cigarettes ora tobacco product (as defined in IC 6-7-2-5) from a distributor that

holds a valid registration certificate.
    (b) Each day a retailer fails to produce an invoice or otherevidence under subsection (a) constitutes a separate violation of thissection.
    (c) This subsection applies in addition to or instead of any othercivil or criminal penalty. The department or the department of staterevenue may impose on a retailer that violates subsection (a) a civilpenalty that does not exceed the greater of:
        (1) five hundred percent (500%) of the retail value of thecigarettes described in subsection (a); or
        (2) five thousand dollars ($5,000);
for each violation.
    (d) In addition to any other penalty described in this section, thedepartment or the department of state revenue may seize thecigarettes or other tobacco products for which the retailer is unableto produce the invoice or documentary evidence described insubsection (a). The seized cigarettes or other tobacco products shallbe forfeited to the state and destroyed.
    (e) Civil penalties collected under this chapter shall be depositedas follows:
        (1) Seventy percent (70%) to the enforcement andadministration fund established under IC 7.1-4-10.
        (2) Thirty percent (30%) to the state general fund for the use ofthe department of state revenue.
As added by P.L.252-2003, SEC.14.

IC 24-3-2-5
Cost to the distributor; further definition
    Sec. 5. When one distributor sells cigarettes to any otherdistributor, the former shall not be required to include in his sellingprice to the latter cost to the distributor as provided in section 2(j) ofthis chapter, but the latter distributor, upon resale to the retailer, shallbe subject to the provisions of section 2(j) of this chapter.
(Formerly: Acts 1949, c.51, s.5.) As amended by P.L.152-1986,SEC.36.

IC 24-3-2-6
Exceptions
    Sec. 6. The provisions of this chapter shall not apply to sales atretail or sales at wholesale made:
        (a) in an isolated transaction and not in the usual course ofbusiness;
        (b) where cigarettes are offered for sale or sold in bona fideclearance sales for the purpose of discontinuing trade in suchcigarettes and said advertising, offer to sell, or sale shall statethe reason thereof and the quantity of such cigarettes offered forsale or to be sold;
        (c) where cigarettes are offered for sale or sold as imperfect ordamaged and said offering to sell or sale shall state the reasontherefor and the quantity of such cigarettes offered for sale or

to be sold;
        (d) where cigarettes are sold upon the final liquidation of abusiness; or
        (e) where cigarettes are offered for sale or sold by any fiduciaryor other officer acting under the order or direction of any court.
(Formerly: Acts 1949, c.51, s.6.) As amended by P.L.152-1986,SEC.37.

IC 24-3-2-7
Sale to meet price of competitor
    Sec. 7. (a) Any retailer may offer to sell or sell cigarettes at aprice made in good faith to meet the price of a competitor who isselling the same article at cost to him as a retailer, as defined insection 2(i) of this chapter. Any distributor may offer to sell or sellcigarettes at a price made in good faith to meet the price of acompetitor who is rendering the same type of service and is sellingthe same article at cost to him as a distributor, as defined in section2(j) of this chapter. The price of cigarettes offered for sale or soldunder the exceptions specified in section 6 of this chapter shall notbe considered the price of a competitor and shall not be used as abasis for establishing prices below cost, nor shall the priceestablished at a bankrupt sale be considered the price of a competitorwithin the purview of this section.
    (b) In the absence of proof of the price of a competitor under thissection, the lowest cost to the retailer or the lowest cost to thedistributor, as the case may be, determined by any cost survey madepursuant to section 11 of this chapter, may be deemed the price of acompetitor within the meaning of this section.
(Formerly: Acts 1949, c.51, s.7.) As amended by P.L.152-1986,SEC.38.

IC 24-3-2-8
Contract in violation of chapter; contract
    Sec. 8. Any contract, expressed or implied, made by any personin violation of any of the provisions of this chapter is declared to bean illegal and void contract, and no recovery thereon shall be had.
(Formerly: Acts 1949, c.51, s.8.) As amended by P.L.152-1986,SEC.39.

IC 24-3-2-9
Evidence to establish cost
    Sec. 9. (a) In determining cost to the retailer and cost to thedistributor, the court or the department, as the case may be, shallreceive and consider as bearing on the bona fides of such costevidence tending to show that any person complained against underany of the provisions of this chapter purchased cigarettes withrespect to the sale of which complaint is made at a fictitious price, orupon terms, or in such manner, or under such invoices, as to concealthe true cost, discounts, or terms of purchase, and shall also receiveand consider as bearing on the bona fides of such cost evidence of

the normal, customary, and prevailing terms and discounts inconnection with other sales of a similar nature in the trade area orstate.
    (b) Merchandise given gratis or payment made to a retailer ordistributor for display, or advertising, or promotion purposes, orotherwise shall not be considered in determining the cost ofcigarettes to the retailer or distributor.
(Formerly: Acts 1949, c.51, s.9.) As amended by P.L.152-1986,SEC.40.

IC 24-3-2-10
Evidence of price outside ordinary channels of trade
    Sec. 10. (a) In establishing the cost of cigarettes to the retailer ordistributor, the invoice cost of said cigarettes purchased at a forced,bankrupt, or close-out sale, or other sale outside of the ordinarychannels of trade, may not be used as a basis for justifying a pricelower than one based upon the replacement cost of the cigarettes tothe retailer or distributor, within thirty (30) days prior to the date ofsale, in the quantity last purchased, through the ordinary channels oftrade.
    (b) Any cigarettes that are imported or reimported into the UnitedStates for sale or distribution under a trade name, trade dress, ortrademark that is the same as or confusingly similar to a trade name,trade dress, or trademark used for cigarettes manufactured in theUnited States for sale or distribution in the United States arepresumed to be purchased outside the ordinary channels of trade.
(Formerly: Acts 1949, c.51, s.10.) As amended by P.L.21-2000,SEC.9.

IC 24-3-2-11
Cost survey as evidence
    Sec. 11. Where a cost survey pursuant to recognized statisticaland cost accounting practices has been made for the trading area inwhich the offense is committed to establish the lowest cost to theretailer and the lowest cost to the distributor, said cost survey shallbe deemed competent evidence to be used in proving the cost to theperson complained against within the provisions of this chapter.
(Formerly: Acts 1949, c.51, s.11.) As amended by P.L.152-1986,SEC.41.

IC 24-3-2-12
Injunction
    Sec. 12. (a) The department, or any person injured by anyviolation or who shall suffer injury from any threatened violation ofthis chapter, may maintain an action in any court of equitablejurisdiction to prevent, restrain, or enjoin such violation orthreatened violation. If in such action a violation or threatenedviolation of this chapter shall be established, the court shall enjoinand restrain or otherwise prohibit such violation or threatenedviolation, and in addition thereto, the court shall assess in favor of

the plaintiff and against the defendant the costs of suit includingreasonable attorney's fees. In such action it shall not be necessarythat actual damages to the plaintiff be alleged or proved, but wherealleged and proved, the plaintiff in said action, in addition to suchinjunctive relief and costs of suit, including reasonable attorney'sfees, shall be entitled to recover from the defendant the actualdamages sustained by him.
    (b) In the event that no injunctive relief is sought or required, anyperson injured by a violation of this chapter may maintain an actionfor damages and costs of suit in any court of general jurisdiction.
(Formerly: Acts 1949, c.51, s.12.) As amended by P.L.152-1986,SEC.42.

IC 24-3-2-13
Rules; powers of department
    Sec. 13. (a) The department may adopt rules for the enforcementof this chapter, and the department is empowered to and mayundertake a cost survey, as provided for in section 11 of this chapter.The department may, in accordance with IC 4-21.5-3, suspend orrevoke any registration certificate issued by it to a distributor underIC 6-7-1 for failure of any registrant to comply with this chapter orany rule adopted under this chapter.
    (b) All the powers vested in the department by IC 6-7-1 shall beavailable to the department in the enforcement of this chapter.
(Formerly: Acts 1949, c.51, s.13.) As amended by P.L.152-1986,SEC.43; P.L.7-1987, SEC.105.