Opinion Supplemental Letter Relative to Request May 6, 1974

1695 Opinion
Supplemental Letter Relative to Request
May 6, 1974
Dear Mr. Tobin:

Scott Paper Company presently has pending before the Commission a request for an advisory opinion in connection with the offering of promotional allowances for meeting or exceeding an established quota. In that connection I would like to herewith bring to the attention of the Commission in the event they are not already aware of it, the recent decision by the United States District Court for the Eastern District of Wisconsin in Tosa Chrysler-Plymouth, Inc. v. Chrysler Motors Corp. The court in this case appears to have held that a quota system which is fairly established may constitute the foundation for incentive payments because it is functionally available to all competing customers.

Very truly yours,
/s/ Ellis A. Horwitz
Supplemental Letter Relative to Request

Letter of Request
October 16, 1973
Dear Sir:

Enclosed is a comprehensive description of a proposed “incentive program” which Scott Paper Company would like to initiate provided the program meets with Commission approval.

The “incentive program” is not currently in effect and to the best of _ my knowledge, such plan is not the subject of investigation or any other

Opinion 84 F.T.C.

proceeding brought by the Commission or any other governmental agency.

If you desire, we will be pleased to answer any questions you feel are

necessary.
Very truly yours,
/s/ Ellis A. Horwitz
Associate General Counsel
CORPORATE INFORMATION

Scott Paper Company is a Pennsylvania corporation with its corporate headquarters located at Scott Plaza 1, Philadelphia, Pennsylvania 19113. Scott is a publicly owned corporation, with its stock traded on the New York, Philadelphia-Baltimore-Washington, and Pacifie Coast Stock Exchanges. Additional detailed information concerning the Company’s business and officers is contained in its most recent S.E.C. Form 10K which is enclosed herewith.

BUSINESS INFORMATION Scott is engaged primarily in the manufacture and sale of pulp and paper products. Its products are manufactured at various locations in the United States and distributed nationally. It also has varying ownership interests in numerous foreign corporations which are engaged primarily in the manufacture and sale of paper products in many areas of the world: Scott’s consumer trademarked packaged paper products include items such as facial tissue, napkins, paper towels and toilet tissue which are marketed under brand names such as “Scot Tissue,” “Lady Scott,” “Soft-Weve,” “Scot Towels,” and “Viva.” Scott sells its consumer packaged products to the trade for resale to consumers. Such sales are made by Scott to grocery wholesalers, grocery retail chains and independent grocery retailers as well as drug, discount and variety outlets. THE PROPOSED PROGRAM Seott would like to introduce an “incentive program” through which all of its purchasers can realize equitable cash refunds for increasing their purchases of various Scott consumer packaged paper products. The market for consumer packaged paper products is highly competitive. A number of very large companies such as Proctor & Gamble, American Can, Georgia Pacific, Kimberly-Clark, and Crown Zellerbach have substantially expanded their marketing and sales of paper products in recent years and private label sales are continuing to gain in prominence. Scott’s interest in such an incentive program is to assist sales of various of its brands in this highly competitive market. Under the terms of the proposed “incentive program,” each purchaser would be granted a four per cent cash refund on those case purchases of specified Scott consumer brands made during a designated performance period, which exceed by four per cent such customer’s case purchases of such Scott consumer brands during a previously designated base period. The specifics of the proposed program are detailed below. Base and Performance Periods. The base period to be used would be a designated quarter or other period of the preceding year. The performance period would be a specified quarter or another specified period of the current year. Although there are not numerous new retailer or wholesaler entrants into the market, the proposed plan would make provision for any such new entrant to enable it to