Food store promotional plan

No. 24. Food store promotional plan.

An advisory opinion made public today by the Federal Trade Commi sion informed a company of the "very serious possibi1ity" that a proposed promotional plan wou1d subject participating food supplier advertisers to a charge of law violation. The plan involved the distribution of reprints of advertisements to the public through retai1 food stores, the cost of the reprints to be shared by participating suppliers. No mention would be made of any specific retailer in the advertising and 10 000 000 reprints wou1d be offered at no cost. Each retailer would receive the number requested provided the tota1 ordered did not exceed this available supply. If the orders exceeded 10 000,000, this number would be divided by the total number of check stands in stores requesting copies to determine how many each store would receive.

It appears, the FTC's advisory opinion stated, "that no prob1em would arise under the laws administered by this Commission un1ess and until the requests for reprints exceed the availab1e supply of 10 000 000. In such event, it is doubtful that the basis chosen for distribution of the reprints among competing retailers would result in the proportional equality required the 1aw (Section 2 (e) of the Robinson-Patman Actj. While the Act does not specify any single standard for proportionalizing merchandising services and facilities, it does not appear that the required result wi1 be achieved when the standard selected is the number of checkstands in the stores requesting copies. This standard bears no ascertainable relation to the volume of business which any of the retailers involved might conduct with any of the participating suppliers. In fact, it could resu1t in a situation in which retailers who have a sma1l volume with the participating suppliers would receive more reprints than competing retailers with a much larger volume solely because of a greater number of checkstands. We cannot conclude then that the plan as it is presently proposed would necessarily result in the proportiona1ly equal treatment of a1l competing customers that the law requires. Consequently, there is a very serious possibility ADVISORY OPINION DIGESTS 1211

a charge ofthat it wou1d subject the participating suppJiers to (Fileviolation of Section 2 (e) of the Robinson-Patman Act." No. 633 7018, re1eased Apr. 1 , 1966.

Tripartite Promotional Program Amendment' July 11, 1968

This is in reference to the above-numbered matter and to the Commission s advisory opinion dated April 1, 1966 in which you were advised as to the Commission s view with respect to the proposed promotiona1 program there inv01ved. The Commission has been reexamining this and other advisory opinions rendered in recent years concerning three-party (supplier, promoter, customer) promotional assistance p1ans which have received its fuU or partial approval and has decided to modify this opinion.

This step is necessary because information which has subsequent1y come to the Commission s attention in connection with many such opinions which have been issued indicates that in some instances the customers of the participating suppJiers have not been adequately advised as to the availabilty of the opporadvised astunity to participate in these plans or have not been to the a1ternatives which are supposed to be available to those of eoursewho are unab1e to use the basic p1an. This step is, absolutely essential to the 1egal operation of such proposa1 , for a promotional assistance plan cannot be said to be avai1able to customers who do not know of its existence or who do not understand its terms. It is not the Commission s desire at this time to rescind any of the opinions which have been issued, but, in view of these deve10pments, it is the Commission s view that, as a condition of its continuea' appfoval of your plan, reasonable steps must be taken to see that the required notice is given to each customer who is entitled to participate, and that participants in your p1an are put on notice of their obligations under the laws administered by the Commission.

According1y, the advisory opinion in the above-numbered matter is hereby modified to provide that: (a) The promoter must make it clear to each suppJier and each retailer that even though an intermediary is employed in this plan, it remains the supplier s responsibilty to take aU reasonab1e steps so that each of the suppJier s customers who

'"To the fol1owing Advisory Opillion Digests: No. 24 , p. 1210; No. 34, p. 1216: No. 35, p. 1217; No. 50 , p. 1226; No. 51, p. 1227; No. 52., p. 1228: No. 53, 1229; No. 56, p. 1231; No. , p. 1236.

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compete with one another in resellng his products is offered either an opportunity to participate in the promotiona1 assistance plan or proportiona1ly equal terms or a suitab1e a1ternative if the customer is unable as a practical matter to participate in the p1an; if not, the supplier, the retailer and the promoter participating in the p1an may be acting in violation of Section 2 (d) or (e) of the C1ayton Act and/or Section 5 of the Federa1 Trade Commission Act.

(b) You are directed to submit a written report to the Commission within six months from the receipt of this 1etter indicating the manner and extent of your compliance with the requirement out1ned in the preceding paragraphs.