Retail discount selling organizations The Commission recently advised the promoter of a membership…

No. 114. Retail discount selling organizations The Commission recently advised the promoter of a membership organization of retai1ers which wou1r! grant discounts on purchases and services except where prohibited by Jaw that the p1an was unobjectionable.

More specifically, the plan providedThe promoter would set up a discount program for independent rctai1ers such as auto dea1ers , appliance, furniturc and clothing stores. Chainstores and other discount houses would not be admitted to membership. For $5 per week for 26 weeks or six months, the retailer would become a member of the organization. There would be no fee for consumer-members to join. The promoter \vauld guarantee retailers 30 000 discount member/customers. The retai1ers would bc listed in a book showing the discount each had decider! to give on purchases and services except on "fair traded" items or \vhe1'c prohibited by law. There would be no coordination or combination on prices by participating retailers. A free book with customers membership card as the cover would be mai1ed to an residents in the area in which the p1an is tried.

Although all competing retailers would be offered the opportunity, only one retailer, the first participant in an area, in each category of business \vould be allowed to join in each of the various areas in which the plan is tried. Participating retailers would "cooporate " only in the scnse that an give discounts to member/ customers; however, if a group of retailers wished to purchase an item several sold, the promoter would order the item direct from manufacturers, distributors or importers with whom the promoter has business connections. The Commission advised the appJicant that the p1an itself is unobjectionable. The Commission added however that: a. The participating retailers should grant the discount off the manufacturer s suggested price, where there is one and where a number of the principal retail outlets in the area are regularly engaged in making sales at that price; or off the usual trade area price so that the consumer ,vilJ in fact receive a discount. b. The booklet Jisting participating retailers should note that listing does not imp1y that other businesses in the community do ,p

ADVISORY OPINION DIGESTS 1727 not offer similar or even greater discounts and that the listing of the retailer is donc for a fee.

c. If participation in the plan results in agreement as to prices discounts, terms of sale and the like, such agreement or agreements would be violative of Commission administered law. d. If the literature you use in seeking to persuade retailers or consumer-members to participate actual1y does or has the capacity to mislead or deceive, it would be actionable under Commission administered law.

e. If implementation of the plan results in discriminatory acts which may substantial1y affect competition, same would violate the Robinson-Patman Amendment to the Clayton Act. (File No. 673 7031 , released Mar. 1 , 1967.