The beer promotion was part of a Society of Otago University Law Students quiz night held in May last year.
The full price of the jugs was subsidised by the society.
Dunedin police applied to have the on-licence and the general manager's certificate suspended after a woman complained to police about the cheap jugs and the intoxication of her son's friends at the quiz night.
Sergeant Wayne Pitcaithly said even though the licensee technically received the full price for each jug of beer, it had encouraged excess consumption of alcohol through holding the promotion for a group it knew was susceptible to drinking too much.
A hearing was held in Dunedin in March.
In his decision, released this week, authority chairman Judge John Hole suspended the on-licence of Stab in the Dark Ltd for its Captain Cook Tavern premises for 24 hours.
The suspension must be to be carried out on a Wednesday, the day of the week the breach occurred.
He also suspended for 28 days the general manager's certificate of Cody Browne, the duty manager the night of the quiz.
In the decision, Judge Hole said that by selling the cheap beer over a lengthy period to relatively young students, the licensee put itself at risk of breaching the Sale of Liquor Act.
"This was not mere carelessness, but connivance."
In each case where a promotion was suggested, a licensee must make a judgement call as to whether the promotion was likely to encourage excessive consumption, he said.
In this case, the licensee knew the patrons were university students.
"The habits of university students when attending the licensed premises will be well known to the licensee.
"The test, then, is not the extent of the promotion: it is whether or not the subsidy [in this instance] is likely to encourage the intended patrons to drink to excess."
District Licensing Agency head Kevin Meechan and Dunedin police's acting liquor licensing sergeant Neil Kettings were both unavailable yesterday, but agency inspector Tony Mole said the agency was pleased with the suspensions because they sent a message to other on-licences about what was appropriate with regard to holding promotions.
"Every decision gives guidance to licensees on how they need to conduct their business".
Stab in the Dark Ltd director Richard McLeod declined to comment before he had consulted his lawyer.
