Offer of incentive bonus to customers

No. 390. Offer of incentive bonus to customers. The Commission advised that to offer an incentive bonus to open credit account customers to encourage the payment of invoices within established terms and conditions of sale would not be objectionable.

Most sales are made to open credit account purchasers of plumbing supplies and it was proposed to offer an such customers, as wen as an new accounts, a bonus of 1 percent based on the aggregate total of monthly purchases to be given in the form of a credit certificate. This certificate win be honored by a selected local travel agency to apply toward vacation travel, and to be issued to those who adhere to established credit terms. Customers wil present their certificates to the travel agency as partial or complete payment of their vacation expenses within J 8 months from date of issuance.

The Commission expressed the view that the proposed program, as stated, should be considered as a proposal to increase established credit terms and conditions of sale by 1 percent and as such the program probably would not be unlawful except to the extent, if any, the additional discount may effect unlawful price discriminations within the meaning of Section 2 (a), amended Clayton Act. However, because the program wi1 be offered and made available to an open credit account customers and because the single qualifying requirement is adberence to established credit terms and conditions of sale it is not likely that implementation of proposed program would result in any adverse competitive effects. The Commission advised it would initiate no proceedings so long as the proposed program is implemented in the manner and for the purpose intended.

(File No. 703 7040 Released November 18, 1969)