Paying advertising al10wances hased upon certain percentage of purchases from the supplier

No. 26. Paying advertising al10wances hased upon certain percentage of purchases from the supplier. The Commission announced today it had given approval to a proposed promotional plan which cal1ed for the payment of advertising a1lowances to a1l competing customers based upon 5 percent of the customer s annual do1lar volume of purchases from the supplier paying the a1lowance. Its approval was granted ADVISORY OPINION DIGESTS 1213

after it had pointed out several steps which must be followed in the imp1ementation of the plan.

Under the terms of the p1an which is designed to stimu1ate the sa1e of couch throws, the customer must p1ace local advertisements promoting the sale of said products before he is entit1ed to the advertising allowance. Noting that no single way to proportionalize is prescribed by law and that any method which treats competing customers on proportionally equal terms may be utilized, the Commission pointed out that one of the most widely used and acceptable methods is to base the payments on the dollar v01ume of goods purchased during a specified period of time. Since that is precise1y what the party requesting the advisory opinion proposes to do, namely, make advertising payments which amount to 5 percent of the customer s annual dollar volume of purchases of couch throws, the Commission gave its approval to the plan. (File No. 663 7046, re1eased Apr. 8, 1966.