Advisory opinion letter to Mr. Thomas: a proposed course of action, if pursued by it, will constitute…

Dear Mr. Thomas:

This petition is filed pursuant to Section 3.61(d) of the Commission’s Rules of Practice which provides that any respondent subject to a Commission order may request advice from the Commission as to whether a proposed course of action, if pursued by it, will constitute compliance with such order.

Giant Food Inc., hereinafter referred to as Giant, is giving serious consideration to a proposal which involves the sale of its services to various parties and seeks timely advice from the Commission to insure that its actions will not contravene the provisions of. the Cease and Desist Order.

The Commission issued a complaint against Giant on November 21, 1955 charging a violation of Section 5 of the FTC Act, as amended. The Commission’s decision issued on June 1, 1961 required Giant to cease soliciting and accepting as compensation for advertising and promotional services, discriminatory payments from its suppliers which it knew, or should have known, were not made available on proportionally equal terms to all its competitors in connection with an “anniversary sale” (58 FTC 977).

The decision of the Commission was affirmed by the United States Court of Appeals for the District of Columbia on June 14, 1962 (307 F.2d 184). In affirming the decision of the Commission, however, the Court of Appeals stated that “The order should be directed toward prohibition of a knowing inducement and receipt of, or contracting for, the receipt of discriminatory display and promotional allowances.” Thus, the Court of Appeals limited the order and the scope to the general practices involved in the complaint. In recent years, Giant has developed extremely sophisticated and technical information which could be of great value to persons engaged in the marketing of food products. This information is collected from Giant’s computer assisted checkout systems and permits it to develop data on a given product and anticipate trends as to shelf-space allocation, advertising or special sales. Data can be retrieved from each store so equipped and the movement on any item can be analyzed. In addition, reports can be generated for a given brand, including . comparisons, with the movements of similar or competitive products. Projections can be made as to the frequency at which products will be ordered and the frequency of movements from a variety of designated positions on the shelf can be studied. Further, Giant has the capability of conducting spot tests by studying the pattern of placement and handling of products and in this manner report on the effects of juggling either location, number of products, placement in other departments to determine the best sales position. In short, the capabilities of Giant in this regard permit a number of variables and the information can be generated if a determination is made to expend the funds necessary to retrieve the information. Many marketers of products, including Giant suppliers, are familiar with the unique capabilities that Giant possesses to produce information of this kind This information is af nrnven value Giant ic hein

ADVISORY OPINIONS 1208 asked to produce the information and has been offered payment to cover its expenses and anticipates some profit in this regard. Because this may involve, in some instances, the receipt of funds from suppliers who are presently selling merchandise to Giant, even though not connected with purchase or resale, the program raises a question as to the applicability of the Order to Cease and Desist. , We believe that the present Cease and Desist Order does not inhibit the practice of producing and selling information sought by parties in those instances where the parties involved may also happen to be a supplier. Giant does not intend to induce anyone to purchase information but will, to the extent of its capacity, develop information for anyone including present suppliers or their competitors who do not sell to Giant. The Robinson-Patman Act does not prohibit any and every transaction no ‘matter how remote between a customer and a supplier, and we believe the course of action proposed will not contravene the provisions of the order. oo We solicit the advice of the Commission and urge that the request be processed as soon as possible because Giant is postponing its decision to pursue this course of action until it hears from the Commission. Sincerely, /s/ Lawrence P. Solomon