December 6, 2012

A Limited Time Offer: An Opportunity to Comment on the FTC's Fred Meyer Guides

Consumer Advertising Law Blog

With Black Friday (and Cyber Monday) now behind us and the holiday season in full swing, the public's attention is firmly fixed on the deals and discounts available on this year's most popular gifts. But the Federal Trade Commission (FTC) is already looking ahead to the new year and new guidance to keep sellers off next year's naughty list. On December 4, the FTC published a Request for Public Comment on the continuing need for, costs of, and benefits of the Guides for Advertising Allowances and Other Merchandising Payments and Services, more commonly known as "The Fred Meyer Guides." The FTC has published the guides since 1969, but the most recent edition dates back to 1990. Through January 29, 2013, the FTC is soliciting public comments about whether and how to update the Guides.

The Fred Meyer Guides are an agency guidance document designed to help businesses comply with certain parts of the Robinson-Patman Act, which is the law at issue. Broadly speaking, the Robinson-Patman Act prohibits unfair price discrimination by sellers against equally-situated customers when the discrimination harms competition. In other words, a seller cannot try to sell the same product for different prices to equally-situated customers if that conduct harms competition. When offering products for resale to retailers, wholesalers, distributors, and the like, sellers may also want to offer money for advertising with the sale, or provide certain advertising or promotional services with the sale. When sellers offer these kinds of allowances or services, they must make them available on proportionally equal terms to all of their competing customers. The Fred Meyer Guides cover this subset of price discrimination under §§ 13(d) and 13(e) of the Robinson-Patman Act. The FTC published the Guides to provide direction in an area with no governing case law to help businesses better understand what kinds of allowances or services for advertising or promotion they can provide to their customers. While the Guides do not have the force of law --they are industry guides, not regulations-- the Fred Meyer Guides provide insight into the FTC's understanding of price discrimination and the Robinson-Patman Act.

The Guides have a total of fifteen sections, with many sections including a handful of clarifying examples. Given the complexity of the law at issue, and the confusion it often creates, it is not surprising that the first seven sections are devoted to the Act's applicability and key definitions like "seller," "customer," "competing customers," "interstate commerce," and "services or facilities." Sections 8 through 10 provide the FTC's interpretation of Robinson-Patman's substantive requirements. The remaining five sections address liability issues and affirmative defenses.

In its effort to revise the Guides, the FTC seeks input on 14 different questions, including the threshold question of whether the Fred Meyer Guides are still useful. The remaining requests fall into three major categories:

  • Changes to the law and to commerce: The FTC is requesting input into any changes in the law, economic conditions, and technology since 1990, including the effects of the Internet on commerce, that may not be reflected in the Guides, but should be. This category includes the rise of Internet sales and electronic advertising as well as distinctions, if any, between "traditional" sales and sellers and Internet sales and sellers. The FTC is also interested in how changes to case law "may support a private action for inducing or receiving a discrimination in price."
  • Costs and Benefits: The Commission seeks input into the benefits enjoyed by and the costs borne by businesses, including both the buyers and sellers, and consumers under the current direction the Guides provide. The FTC also wishes to know what improvements could be made to reduce those costs and increase those benefits. The FTC separately asks about any special impact "on the costs, profitability, competitiveness and employment of small business entities."
  • Interaction with Other Authorities: The FTC asks about the interaction, overlap, and/or conflict between the Guides and other laws and regulations, including foreign and international laws and regulations. Where there is such interaction, the FTC wants to find out how best to coordinate the Guides with the overlapping or conflicting authority.

The FTC includes a final catch-all question to address "any other problems occurring in the provision of promotional allowances and services covered by the Guides" that have gone unaddressed.

Comments can be filed online or on paper between now and January 29, 2013. We will update readers of changes to the Guides, should the FTC adopt any.

© Arnold & Porter Kaye Scholer LLP 2012 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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