Three-day promotional and merchandising assistance plan available to direct and indirect purchasers

No. 103. Three-day promotional and merchandising assistance plan available to direct and indirect purchasers. The Commission recently advised the promoter of the threeparty promotional assistance plan outlined below that, subject to the admonitions indicated, the plan would not violate Commission administered law. The Plan The promoter proposes to provide promotional and merchandising assistance to suppliers of products normalJy sold in groeery and drug stores. In return for in-store promotion of participating suppliers' products by (1) providing shelf space at least equal to that given competing products selling in the same volume, (2) installing shelf markers or other in-store signs furnished by the promoter advertising the promoted e. what the re-products, (3) maintaining adequate supplies (i. tniler decides he needs to avoid a sellout) of promoted products and (4) periodic (one week in each quarter) off shelf displays (aisle end or other than normal shelf position), the retailer would earn an amount equal to 2'10 of his net purchases of promoted products, subject to a maximum monthly payment of $40 per store. Earnings would be computed on a store-by-store basis. The amount earned would be based on purchases of promoted products regardless of whether the retailer purchased directly from the supplier or through a wholesaler. In addition, retailers could, at their option, buy or rent in-store sound equipment and purchase a background musk service from the promoter. The speakers could be used for in-store announcements by the retailers; however, participating suppliers' advertisements would not be broadcast over the network stores. The charges to the retailers for the sound system and music would be applied monthly or quarterly to promotional assistance payments earned for participation in the Plan (i, e. the 2'10 purchases). Any excess of earnings over eharges would be paid to the retailers in cash.

At the outset and every six months thereafter, the plan would he offered by letter from the promoter to all drug and groeery outlets listed in the yellow pages of the telephone book, which lists oflist would be supplemented by participating suppliers' competing customers selling the promoted product. ADVISORY OPINION DIGEST 1887 Participating retailers would agree to al10w the promoter representatives to check on performance and submit reports to suppJiers. The reports would contain information regarding the sheJf space given the supplier s promoted product, the prices at which it is sold , its shelf position (eye, waist or bottom level) and the Jike.

With regard to the admonitions, the Commission expressed the view that;

(1) In addition to the letter at the outset and every six months to each competing resel1er of promoted products of the supplier, new, competing customers should be offered the plan when the first sale of the promoted product is made to them. The reason is that such new eustomers are entitled to be offered the assistance promptly.

(2) The reports the promoter submits to suppliers should not contain information which may be used for price fixing purposes. (3) Prospective participants in the plan should be told: (1) the fact that the promoter is positioned between the supplier and the supplier s customers-the retailers-does not effect applicability of Sections 2 (d) and (e) of the Robinson-Patman Act and Section 5 of the Federal Trade Commission Act to the plan: (2) even though the promoter is employed, it is the supplier s responsibility to make certain that each of his customers who compete with one another in se11ng the promoted product is offered the opportunity to participate. If opportunity is not offered, or an i1egal discrimination results, the supplier, the retailer and the promoter may be acting in violation of Section 2 (d) or (e) of the Robinson-Patmanamendment to the Clayton Act and/or Section 5 of the Feder'll Trade Commission Act. (File No. 673 7012, released Nov. 22 1966.

Modified July 11 , 1968, 69 F. C. 1211.