Request for reconsideration of Advisory Opinion 333 15.333) pertaining to wholesaler-manufacturer…

No. 393. Request for reconsideration of Advisory Opinion 333 15.333) pertaining to wholesaler-manufacturer relationship; Freight saving as cost justification. The Commission was requested to reconsider the advice given in Advisory Opinion Digest No. 333 (Section 15.333) concerning manufacturers' selling relationships with wholesalers. The Commission also considered the question of passing along freight savings to customers. After concluding that it would adhere to the advice given in the earlier Advisory Opinion the Commission noted that the issue of potential price discrimination between competing wholesalers some receiving 40 percent and others 25 percent discounts off list prices, no longer existed since only one discount rate is now involved. Kegative advice was given in connection with the following three factual situations because, in the Commission s opinion, applicable antitrust law prohibits suppliers from taking certain punitive action against wholesalers with whom they have been dealing: (1) A manufacturer refuses to deal further with a wholesaler who has changed his method of doing business and has undertaken to franchise subjobbers whom he prohibits from buying directly from the manufacturer and requires that they purchase all the manufacturer s products through the wholesaler. (2) A manufacturer discontinues sales to a wbolesaler who ceases to maintain salesmen at all times who regularly call upon beauty salons and advise licensed professional hairdressers " the safe and proper methods of applying the manufacturer products and who keep suffcient supplies " on hand for current needs of their beauty salon customers.

(3) A manufacturer refuses to deal further with a wholesaler who, without the manufacturer s authorization, resells to independent subjobbers and other wholesalers. With respect to the problem of cost justification the Commission advised that applicable provisions to Section 2 (a) of the amended Clayton Act permit a supplier to pass along freight savings to customers but only to the extent of such savings and only if available to all customers competing in the resale of his products. (File No. 693 7059 Released December 16, 1969)