"Backhaul" Allowances advisory opinion afirmed

No. 483. "Backhaul" Allowances advisory opinion afirmed. (File No. 683 7026, releas Dec. 26, 1973, 8:J F. C. 1843, 16 R. 915.48.1) Clarification of Ruling (File No. 68.3 7026). . ..

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ClrLrif1Jing Opinion Letter

Mar. , 1975.

Dear Mr. Silbergeld:

, Your letters of Nov. 8, and Dec. 12, 1974, have been considered by the Commission. The Commission is of the view that a useful purpose would be served by providing brief review and comment relative to the various points that you have raised.

Principally referenced in your initial letter was Commission Advisory Opinion No. 147, issued Oct. 24, 1967, relating to "backhaul" allowances. You characterie that opinon as constituting a form of government "regulation" and suggested inte alia that the opinion mandates waste and ineffciency in transporttion. Advisory Opinion No. 147 was directed to a rather narow issue whether General Foods Corpration, the company that requested the Commission s opinion, might violate Section 2(a) of the Claytn Act as amended, if it requied its rank and me customers to continue to purchase from it pursuant to a uniform zone delivered price system while, at the same time, it offered varg freight-related allowances to private-carrer" customers positioned to take "dock" delivery. The allowances would vary according to whatever common carrer charge would apply if, in fact, delivery were mae to those customers' home locations.

That such deviations in customer pricing could result in ileg-dl price discrimination would seem faily apparent once the situation is examined. For example, different "private-cer" purcha.(;ers, even though purchasing the same goods, in the same quantities, by precisely the same method - i.e. by pick-up in their own trucks at Genera Food' dock or warehouse, would buy those goos at substantialy different net prices under General Foods' proposal. Substatial net price differentials would not only obtain among and between individual private-carrer" purchasers taking "dock" delivery, but those purchasers would be provided, in tur, varng net purchase price advantages over "delivered-price" customers of C'xenera Foos supplied from that same shipping point.

The Commission in connection with its responsibility to enforce the requirements of Section 2 of the Clayton Act, as amended, advised Geneml Foods that, assuming the presence of other elements necessar to a determination of violation of the statute, implementation of its proposal would pTobably result in a violation of law. The choice of the basic underlying pricing system, addressed in the opinion, was Genera Foods . The issue raised by Gener.u Foos was not with respect to the merits of its delivered price system but, mther, the