Tripartite Promotional Plan (See Digest No. 103, 70 F. C. 1886; revoked Sept. 1973, 83 F. C. 1839.release…

1410 FEDERAL TRADE COMMISSION DECISI01\S

87 F.

ADVISORY OPINIONS

Tripartite Promotional Plan (See Digest No. 103, 70 F. C. 1886; revoked Sept. 1973, 83 F. C. 1839. File No. 673 7012 release February 6, 1976.

Opinion hotter

January 29, 1976 Dear :vr. Bellan:

This is in response to your request for a new advisory opinion. By notice dated October 5, 1973 the Commission revoked the October 27 1966 advisory opinion, captioned above, to Merchants Broadcasting Systems, Inc. The firm, as you have advised, is now known as SuperMarketing Services. The Commission, in its notice of revocation, advised that if you wished to modify the method of operation outlined in your previous request to be in compliance with the Commission s Guides (a copy of which was enclosed with the notice), it would consider issuance of a new advisory opinion.

Your original request for advice from the Commission dates from a period before the Supreme Court' s decision in the matter of Federal Trade Commission v. Fred Meyer, Inc., et aI. 390 U.S. 341 (1968), and before promulgation by the Commission in 1969 of Guides responsive to the Court's opinion and decision in that case. The Guides, accordingly, deal with some additionally defined aspects of the law of subsections (d) and (e) of Section 2 of the Clayton Act, as amended, including thirdparty performance of seller s obligations , viz., performance of such obligations by promoters of tripartite promotional assistance plans. You have informed the Commission that your tripartite promotional plan has been modified to eliminate the earlier requirement that the retail seller of any products promoted under the program must "* * * provid(eJ shelf space at least equal to that given competing products selling in the same volume.

Withdrawal of this requirement could uperate to resolve the problem of possible primary line competitive foreclosure inherent in the lease or purchase of retailers ' shelf space, either directly or by means of socalled promotional allowances. On the basis of this factor alone however, the Commission is unable to determine whcther your plan complies with the Commission s Guides, as amended August 4 . 1972. Among the ceveral open issues presented are (1) whether, in conjunction with Guide 13 (third party performance of seller obligations), the plan satisfies Guide 8, dealing with means of ADVISORY OPI;\IOKS 1411

notification and, in particular, notification to indirectly supplied retail customers; (2) whethcr the program satisfics Guide 9 relative to its availability to and useability, in a practical business sense , by a11 competing customers on proportiona11y equal terms; and (3) whether the pJan satisfies Guide 11, concerning customer performance and overpayments. The Commission notes that payments under the subject program apparently are in consideration, in substantial part, for services of a non-merchandising or non-promotional character. Moreover, the extent and nature of any required pcrformance of specific advertising or merchandising services by competing retail customers are not spe11ed out. In these circumstances the Commission cannot determine whether payments and services under the program are or are not available to and accorded a11 competing customers on proportiona11y equal terms. Accordingly, your request for a new opinion is denied.

By direction of the Commission.

utter of Request

October 16 , 1973 Dear Mr. Tobin:

It has come to my attention that a portion of the advice given in this matter is not in accord 'With the Commissions view of the Jaw as expressed in the " GUIDES FOR ADVERTISING ALLOWANCES A.'JD OTHER ERCHA DIsrr-G PAYME?\TS AND SERVICES " as amended, specifical1y, item (1) providing sheif space at least equal to that given competing products se11ing in the same volume.

1 warrant that this portion of "The Plan" is not and has not been implemented as long ago as August of 1969 as evidenced by its absence in our "letter of offer

ing" enclosed.

Based on this modification of "the Plan " I respectfu11y request the issuance of a new advisory opinion.

Should a new advisory opinion be forthcoming, I would appreciate it being made out to OUf new corporate name, Super-Marketing Services.

Respectfu11y,
/s/ Rudy Be11an
President

EncLosure to Letter of Request Gentlemen:

SePER-MARKETING SERVICES is offering a program to all retail grocery

87 F.

and drug stores in this area whereby cash payments and/or background music can be earned in consideration for promotional services rendered to suppliers.

SMS as the promoter of its promotional assistance plan would like each supplier and each retailer to understand that even though SMS is employed as an intermediary, the supplier should still recognize his responsibility to take reasonable steps to see that each of the supplier customers who competc with one another in reselling his products is offered the opportunity to participate in the SMS promotional assistance plan on proportionally equal terms. Retail stores wishing to participate may elect to do so under either Plan "A" or Plan " . Plan "A" and its alternative, Plan "B" are briefly described below:

PLAN "

1. SMS is making available a promotion and merchandising service to be sold to suppliers whose products are normally handled by retail grocery and drug storcs. In order that the merchandising servicc be both valuable and salable to suppliers, each participating retail store MUST agree to perform the following promotional services for SMSpromoted products: aJ Stock SMS-promoted products in adequate quantities on shelf and in the warehouse;

b J Regularly provide periodic "off-shelf" displays for each SMSpromoted supplier; c J Allow SMS rcpresentatives to place mutually agreed upon point-of-sale" material;

dJ Allow SMS reprcsentatives to cnter stores at regular intervals for the purpose of rendering store-level reports to the suppliers. 2. SMS will provide a background music suitable for the store sales area. If no loud speaker system exists, SMS will provide the speakers, amplifier and microphone necessary to broadcast the SMS background music. The sound system may also be used for pahring purposes. Stores will be charged a one-time installation charge for installing the sound equipment and a monthly charge for the background music servicc.

3. In exchange for the promotional services performed by the store for participating suppliers, SMS will compensate the store in an amount equal to 2% of the store s net purchases of SMS-promoted products. The store will be credited the 2% payment whether the store ADVISORY OPINIONS 1413

purchases the SMS-promoted products directly from the supplier or through a wholesaler. Payments earned wi1 be subject to a maximum per store per supplier.

PLAN "

1. SMS is making availab1c a promotion and merchandising service to bc sold to suppliers whose products are norma1ly handled by retail grocery and drug stores. In order that the merchandising service be both valuable and salable to suppliers, each participating retail store MUST agree to perform the fo1lowing promotional services for SMSpromoted products: A) Stock SMS-promoted products in adequate quantities on the shelf and in the warehouse;

b) Regularly provide periodic "off-shelf" displays for each SMS promoted supplier;

c) A1low SMS representatives to place mutua1ly agreed upon point-of-sale material;

d) A1low SMS representatives to enter stores at regular intervals for the purpose of rendering store-level reports to the suppliers. 2. In exchange for the promotional services performed by the store for participating suppliers, SMS wi1 compensate the store in an amount equal to 2% of the store s net purchases of SMS-promoted products. The store wil be credited the 2% payment whether the store purchases the SMS-promoted products directly from the supplier or through a wholesaler. Payment earned wil be subject to a maximum per store per supplier.

We have listed on the reverse side a list of manufacturers and promoted products currently under contract and participating in the SMS service in your area. It should be rccognized that the list of participating suppliers is subject to change due to cance1lations and SMS would like to point out that the above methods are used and suggested for use to comply with Section 2(d) or (e) of the Clayton Act and! or Section 5 of the Federal Trade Commission Act. The above description of the SMS Program, and its alternative, briefly outlines its purpose and function. SMS invites your participation. If you are interested in either Plan "A" or Plan " , please write or call

for fu1l details.
Very truly yours
SUPER-MARKETING SERVICES
1\ orman L. Wanetick
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