Trade association publication recommending procedures for freight prepayment by manufacturers

No. 246. Trade association publication recommending procedures for freight prepayment by manufacturers.

The Commission rendered an advisory opinion informing a trade association of wholesalers that it could not give its approval to a proposal to conduct a study of various policies for prepaying freight being used by manufacturers and to publish the results as a recommended procedure for prepaying freight. The Association advised that a certain number of manufacturers who sell to its members have a "paid freight" policy whereby they ",ill . pay the freight, on one of a number of bases, on orders above a certain quantity which are shipped to the members. l\Iany manufacturers do not have such a policy. Among those that do, there are fifteen to twenty different procedures for handling payment, most of which involve a lapse of time of from sixty days to six months before the IV holesaler can collect the allowance. The Association is interested in conducting a study of these practices with the ultimate view of reducing the fifteen or twenty procedures now in effect to perhaps two or three and also to reduce the time period for the recovery of the funds to no more than sixty da.ys, thus eliminating the long period in which capital of the members is tied up in what is supposedly prepaid freight.

The Association stated that these efforts are not in any way intended to coerce manufacturers into giving" freig"ht allowances they do not care to give, but are solely to reduce the complexity and cost of doing business. It definitely plans to publish the results as a "recommendecl procedure for prepaying freight " but does not plan any 1334 FEDERAL TRADE CO::VIMIS8IOX DECISIONS efforts to enforce this recommendation or to put any pressure on the manufacturers to adopt the recommendation beyond the simple publication of the results of the, study and the recommended procedure. The Commission advised that even though the study and published recommendation may be motivated by a purpose to remove C'Tils affecting the industry, it appears to go further than is reasonabl~r necessary to accomplish such result. Even if unaccompanied by an~' intent to force the. manufacturers to adopt the policies set forth in the recommendation, there is implicit in such reeommendntion b~r the ",holesalers too grave a. danger that it will sen-e as a device ,\hel'eb~T the concerted po"er of the members of the. J,,-ssoeiation is brought bear to coerce the manufacturers to conform their pricing policies to the restrictive standards of the recommendation , or at the vel' least as an invitation to enter into agreements among themselves to do so. The Commission 'would, ho"ever, ha n~ no objection to the preparfltion b~T the Association of fln objective study of these pl'actices for the members of the ~~"-ssociation prm-ided the. stud~- did not contain any recommendations. (File Xo. 683 7106. released :\Iay L\ 1968. )