Receipt of promotional allowances prohibited by order

No. 288. Receipt of promotional allowances prohibited by order. The Commission was requested to render an advisory opinion with respect to the legality of a respondent's proposed participation in a special promotion sponsored by one of its suppliers. The respondent, a retailer, is under an outstanding Commission order which prohibits it from inducing and receiving promotional allowances when it knows or should know that the allowances are not made available on proportionally equal terms by the supplier to all its other customers in competition with the respondent. According to information provided by the respondent, the supplier essentially has offered to pay 50 percent of the respondent' advertising space and/or time costs up to a maximum participation of $5 000. Further, the Commission understands that the supplier has at least two other retailer customers in the respondent' s trading area and that the suppJier has represented to respondent that it wil at some undisclosed future time offer thc special promotion to each.

On the basis of this information, the Commission advised that whether respondent' s proposed participation in the subject promotion will be in compJiance with the order to cease and desist depends in large part upon the general availability of the said promotion, a threshold determination which must be made by the respondent.

The Commission advised that if the subject promotion is available to the other known customers of the supplier who compete with the respondent, no problem would secm to be presented by respondent' s participation in the promotion. On the other hand, if respondent knows or, as a reasonable and prudent businessman should know that the promotion is not available to such other

known customers at such time as respondent \vould participate the promotion (and the information before the Commission strongly suggests that this is the case), respondent's participation in the promotion would be in violation of the order. Accordingly, the respondent was directed to inform the Commission of any determination it makes to participate in this promotion. (File ",0. C-1053, released Sept. 6 , 1968. ) (Issued under authority of Section 3.61 (c) of the Commission s Rules of Practice (1967).