Hiatus requirement of the Trade Regulation Rule of Games of Chance in the Foo Retailng and Gasoline…

Hiatus" requirement of the Trade Regulation Rule of Games of Chance in the Foo Retailng and Gasoline Industries (16 C. 419.1(f)) (File No. 773 7010).

Letter of Response

:Iarch 25, 1977

Dear Mr. Rogal:

This is in response to your March 16, 1977, request for an advisory opinion respecting the so ca11ed "hiatus" requirement of the trade regulation rule for Games of Chance in the Food Retailing and Gasoline Industries (16 C. R. 419. 1(f).

The Commission has recently directed its staff to initiate a rulemaking proceeding for amendment of said rule, specifica!!y to include consideration of repeal of Paragraph (f), the "hiatus" requirement. As your request seeks , in effect, individual exemptions from the "hiatus requirement of the rule, it is not deemed appropriate for advisory OpInIOn.

By direction of the Commission.

LettBr of ReqU/3st

March 16, 1977

Honorable Commissioners:

The undersigned was ora11y informed today by attorney Edwin F. Dosek of the Commission s Bureau of Consumer Protection that the Bureau s staff has determined to advise the undersigned that the proposed courses of action described in the two attached Requests for Staff Advisory Opinion would violate the Commission s trade regulation rule governing games of chance in the food and gasoline retailing industry. He stated that it was the staff's opinion that extensions of the games for additional thirteen week periods would violate section 4J9. 1(f) of the rule which reads as follows: PromotR or use any new game without a break in time between the new game and any game previous!y employed in the same establishment equivalent to the duration of the game previously employed.

Mr. Dosek further advised me that it is the staff' s view that under the circumstances presented when some of the independent stores which participated in the first run of the game do not wish to participate in the extension or when stores which did not participate

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the first run wi!! participate in the second run , the second run constitutes a "new game" and fa11s ,, thin the quoted rule provision. According to Mr. Dosek the second run is a "new game" because the geographic area wi11 change and the total number of prizes and game chances distributed will change. The staff was not persuaded by the fact that al1 other aspects of the game ,, l1 remain exactly the same including the odds or chances of winning a prize in each separate prize category.

The undersigned is at a loss to understand the staff' s negative views on these simple proposals. There is absolutely no chance of consumer confusion or deception. The independent stores are scattered widely over a three state area in one instance and an cleven state area in the other. Newspaper advertising is the only medium employed since the rule bans the use of radio or television advertising. The stores prepare and disseminate their own advertising on a town-by-town or area by area basis.

This request points up the anti-competitive nature of the rule provision quoted above. Here we have independent grocery stores blocked in a competitive fight with large retail food chains. I do not have any current information as to the competition which faces the Malone and Hyde Stores but as the attached Request on behalf of Associated Grocers of Colorado points out, that group is faced with competition from two large chains which together control in excess of 80 percent of the food retail market in that three state area. Vvnat possible public interest is served by denying to these independent grocers the right to employ this completely lawful method of competition? In closing I wish to point out that this request differs from the request submitted by Fox Grocery Company in that we arc not requesting the opportunity to engage in an entircly new and different game but merely requesting the opportunity to extend the same promotion with slightly different participants.

Final1y, it is urgently requested that the Commission handle this request with al1 possible speed. A refusal to respond within the next ten days will, in effcct, constitute a denial for orders for printing the game materials must be in the hands of the printcr by 1arc:h 25 1977. Respectfully submitted

Isl Willaim W. Rogal ADVISORY OPINIONS