Proportionally equal treatment for competing customers under promotional assistance programs

No. 77. Proportionally equal treatment for competing customers under promotional assistance programs. In advisory opinions announced today by the Federal Trade Commission , two promotional assistance programs devised by third parties for grocery retailers and suppliers have been approved if the proposed plans are implemented as represented. Under the one plan , an independent promoter would supply food retailers with racks in which to display recipe eards and uniformly pay the retailer for providing space for each rack used. Manufacturer-suppliers (1) would furnish participating customers with cards containing recipes ca11ing for the use of the manufaeturer s product and a picture of the finished reeipe item or of the manufacturer s product-on a proportional1y equal basis related to the retailer s volume of sales of the product ADVISORY OPINION DIGEST 1863 (2) pay the promoter for the cards at a per-card-supplied rate, and (3) offer the plan to each customer by means necessary to insure complete notification of the plan to all competing customers. After each initial distrihution, retailers would receive as many additional cards as requested up to 1 000 per month per product.

The other plan, proposed by a separate promoter, would utilize a variation of the "jigsaw puzzle. " Each time a shopper would pass the check-out stand (no purchase would be required) of a partieipating grocery retailer, she would receive a card from which four assorted pieces of a reproduction of a label could be removed. Upon co11ecting pieces necessary to form a complete facsimile of either a private or name brand label, she would be a warded a prize of trading stamps , cash or merchandise. In each eight-week period the plan would be in operation, eight different products wi11 be involved, six of which wi1 be name brands of participating suppliers and two private labels selected by participating retailers. If the retailer does not have private labels to enter in the program, his cost will be reduced on a pro-rata basis or he may select eight name brand products and pay the regular price which will be the same to each retailer and supplier pel' product per 1 000 cards (the cost of the program wiJ be defrayed out of this charge). Each retailer wi1 receive the same in-store displays and advertising material and each supplier wi11 have his product pictured on each give-away card. Kecessary notification of the proposed plan wi1 be given and all competing retailers will be afforded the opportunity to participate.

The Commission pointed out to the promoters that "it remains the supplier s responsibility to assure that in fact the retailers who compete with one another are dealt with on proportiona11y equal terms." If the plans are implemented in such a manner, they "would appeal' to satisfy the supplier s obligation of proportiona11y equal treatment and the suppliers partieipating " " .. would not thereby violate any Commission administered laws. In reaching this conclusion, the Commission advised that had relied partieularly upon the below-described three representations by the promoters as to the manner in which the plans will be implemented.

In each of the two promotions, the requesting party informed the Commission that;

(1) A11 competing retailers would be notified of their right to participate in the plan; and ,

(2) The plan would be made available to a11 competing retailers and offered to those located on the periphery of a given marketing area who compete with the participating retailers. The third representation relied upon by the Commission in the respective matters was that;

(Puzzle promotion) A reduction in cost or aJternative choice of either name brand products would be provided participating retailers unable to enter two labels in the p1an. (Recipe card promotion) SmaJJ retaiJers who, for space or other reasons, cannot utilize the larger racks but wish recipe cards featuring one or two profitable items , wiJJ be provided with a "snap-on " shelf rack for this purpose. (File Kos. 65;0 7046 6537059, released Aug. 2, 1966.

Modified July 11 1968 69 F. C. 1211.