Food manufacturer, retaiJer promotion program

No. 52. Food manufacturer, retaiJer promotion program. In an advisory opinion, the Federal Trade Commission has informed a promotional concern that its proposed advertising program to be utnized by food manufacturers and retaiJers would not be in vi01ation of existing law if the program is modified to take into account "exceptions and caveats" pointed out by the Commission.

The promoter proposed to design a number of aisle-end displays, each promoting the name of a food manufacturer and a seasonal recipe incorporating a product of that manufacturer. Displays for twelve participating manufacturers and decorative material would be packaged in a kit (which may be divided into 12 segments) for distribution to retail stores taking part in the program.

According to the p1an, each manufacturer would pay a proportionate share of the cost of the program, retaiJers would bear none of the cost but must agree to provide aisle ends for displays and stack the manufacturers' products , and the number of kits each retailer would receive would be determined by the number of retaij stores each owns.

The Commission advised the promoter, among other things that if all retailers sell the products of all the manufacturers and all can use the entire kit, he would not be required to break down the kit just because a particular retailer' so desired. However, the Commission said, if there are certain customers who do not sell the products of all the manufacturers or who cannot because of space limitations, use the entire kit, then the 1aw would be vi01ated if the promoter insists the retailer take the entire kit or nothing.

After pointing out the requirements concerning notice to all competing customers that the plan is available, the Commission said participating manufacturers would not be obligated to meet the demands for cash by retailers, who cou1d utilize the program ADVISORY OPINION DIGESTS 1229

simply because they refuse the kit or se11 products of on1y one manufacturer.

As to manufacturers requiring signed agreements from retailers who wish to receive the kits, the Commission advised that the law permits manufacturers to require that dea1ers who are to receive the benefit of such promotions must agree to reasonable disp1ay requirements so that the purposes of the promotion may be carried out. However, it noted, retai1ers desiring less than the ful1 kit could not be expected to sign an agreement which wou1d require them to accept the ful1 display kits. Concerning a manufacturer limiting the program to only one of his products and his responsibility to retailers who handle his products only on a "sporadic basis " the Commission said the law imposes no requirement that a sel1er must give advertising allowances or services on al1 his products if he elects to accord them on one or more articles. Problems concerning products of like grade and quality which differ in only minor respects or trade names can be avoided if the suppliers inc1ude entire product lines and thus avoid fine distinctions between products. As to the second query. the Commission stated that would not be safe to exclude any retailer who was in fact customer of one or more of the manufacturers during the course of this promotion.

The Commission pointed out that if there are some grocery outlets which are too small to use the entire kit-or that part of it which represents all the manufacturers with whom they do business-because of actual space 1imitations, then some a1ternative must be provided to keep the p1an from being one which is tailored primarily for larger retailers. If the plan results in any of the manufacturers furnishing facilties to some customers which are not readily usable by others, the suppliers are likely to find themselves in vi01ation of the 1aw. By furnishing alternative method of participation to the sma11er customers such as posters and counter displays, this resu1t can be avoided. (File No. 633 7062, released June 1 , 1966. Modified Ju1y 11, 1968, p. 1211 herein.

1\ o. 53. Self-locating shopping guide promotional program. The Federal Trade Commission has advised a sales promotion company that its proposed plan , to furnish se1f-locating shopping guides to wholesalers for redistribution to their competing retail customers, wou1d not be objectionable provided that smaller retailers are able to obtain proportionally equal treatment. ,

The Commission noted that some of the aspects of the pJan are of interest only to relatively large retailers, and that it appears likely that some, at least, of a participating wholesa1er competing customers may be quite small retailers for whom the proposed plan would have 1itte practical value. The Commission advised that the "statute requires that any services or faci1ities made available to the larger of two competing customers must be made proportionally available to the

smaller.

Assuming the existence of small competing customers, the Commission said it appears clear that if (theJ plan is to conform to statutory requirements some provisions shou1d be included therein which would provide for the needs of the smaller customers. " (File No. 633 7064 , re1eased June 2, 1966. Modified Ju1y 11, 1968, p. 1211 herein.