Promoter’s responsibility in tripartite promotional assistance plan

No. 346. Promoter’s responsibility in tripartite promotional assistance plan.

The Commission issued an advisory opinion relative to the duty and responsibility under the laws administered by the Commission of a promoter or intermediary in a tripartite promotional assistance plan.

The Commission expressed the view that the fact that an intermediary is positioned between the supplier and the supplier’s customers does not affect the applicability of the law to the plan. Such a plan must still provide all of the supplier’s customers who compete with each other in reselling his products an opportunity to participate on proportionally equal terms. In this regard, the plan should contain suitable alternatives for cus 1124 FEDERAL TRADE COMMISSION: DECISIONS tomers who may be unable, as a practical matter, to participate in the primary proposal.

The legality of such arrangements, in the Commission’s view, is measured by whether the promoter and the suppliers using the plan have met this obligation toward the suppliers’ customers or whether participating customers have actual or constructive knowledge that they disproportionately benefit under the plan. In the light of these general principles, the Commission declined to: approve the proposed promotional. plan for two reasons—(1) The proposal did not appear to be a complete plan offering practical alternatives for those customers unable to participate in the primary proposal, and (2) even if it did contain alternatives usable by all competing customers, they would, apparently not all be notified of the entire plan so that each may choose which alternative is suitable for his own use. The Commission stated that if the proposed promotional assistance plan were implemented, section 2(d) or (e) of the Clayton Act, as amended, and/or section 5 of the Federal Trade Commission Act would probably be violated. (ile No. 693 7077, released May 5, 1969.)