FTC advisory opinion digest

No. 66. Magazine publisher s promotional aIlowance program approved.

In an advisory opinion announced today, the Federal Com- ,

mission approved a promotiona1 al10wance program proposed by the publisher of a magazine.

The pub1isher intends to grant newsstand operators an al1owance of ten cents per copy sold upon their certification that the magazine in question was displayed flat on a magazine stand or ful1 cover vertical in a rack at each checkout position. The publisher wiI communicate this offer to magazine retal1ers by printing the display offer on an inner page of the magazine with an appropriate and conspicuous notice or "slug" on the outside cover a1erting the retal1er to the availabi1ty of the plan details of which may be found on a page specified. Since it appears " the Commission advised that aU newsstand operators handling your publication would be a1erted to the availabi1ty of the display al10wance by reason of the conspicuousness of the ' slug,' it is our opinion that your promotiona1 program, so Jong as it is implemented as described, complies ith the requirements of Section 2 (d), amended Clayton Act and newsstand operators receiving payments thereunder wou1d not be liab1e to a charge of violating the Jaw. In reaching this conclusion the Commission has assumed that the promotional al10wance offer wiI be repeated in Eke manner from time to time so that its availability wiI be made known to newsstand operators who begin sel1ing your magazine subsequent to the date of the initial offer. " (File No. 643 7033, released June 25 J966.

1\0. 67. Functional discount to "premium" book jobbers. The Federal Trade Commission today announced that it has advised a publisher of soft cover books that its proposed p1anif implemented as outlined-to grant an extra discount to "premium jobbers" wou1d not violate the 1aw. The publisher distributes its books through retailers, wholesalers and book jobbers and grants identical discounts to the latter two who are in competition with each other. According to the plan as submitted to the Commission, the publisher proposes to grant an extra discount to al1 premium jobbers who sel1 books to institutional customers (savings banks insurance companies , industrial corporations , etc. ) for use as promotion pieces, premiums or prizes on a giveaway basis. To the extent that any premium jobber also sel1s to the regular trade in competition with other wholesalers and retai1ers, the publisher wil1 either refuse to fil1 orders or grant only a normal wholesale discount.

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ADVISORY OPINION DIGESTS 1239

The proposed extra discount, the Commission advised obviously functional in nature" and whiJe the Clayton Act, as "mended by the Robinson-Patman Act does not mention functional pricing the Commission has he1d that a sel1er is not forbidden to sel1 at different prices to buyers in different functional classes provided that injury as contemplated in the law does not result. *"* Applying the law to the facts presented by this request, it would appear that the granting of the extra discount to the premium jobbers would not result in a violation of 1aw if the facts are exactly as represented * * * and if the proposal is implemented precise1y as outlined.

The "discount must be granted only for those sa1es made to the institutional customers described who use the books as giveaways and not for resale" and the "discount must be made available" to al1 customers of the publisher who in fact compete with each other in the resale of the pub1isher s books to insitutional accounts, the Commission continued. It cautioned, however, that if the publisher should classify certain distributors or wholesalers as premium jobbers and permits no one else to sel1 to the institutional customers, which could be accomplished by granting the extra discount only to those so classified, a serious question could be raised if the so-cal1ed premium jobbers also sel1 to regular retailers in competition with other wholesalers. " (File No. 643 7027, re1eased .June 28 1966.