United States: US FTC Revises "Fred Meyer" Guides To Promotional Payments And Services

Last Updated: March 4 2015
Article by Richard M. Steuer

On September 29, 2014, the Federal Trade Commission issued revisions to its Guides for Advertising Allowances and Other Merchandising Payments and Services, popularly known as the "Fred Meyer" Guides, after the 1968 US Supreme Court case that prompted the Guides' creation. The FTC characterized the revisions as "modest," leaving some critics wondering whether this was a missed opportunity to change more.

The Guides were released in 1969 to help businesses comply with sections 2(d) and 2(e) of the Robinson-Patman Act, addressing discrimination in the provision of promotional allowances and other promotional support, termed "services and facilities." (Price discrimination is covered by section 2(a) of the Act.) Many of the new revisions reflect the widespread adoption of electronic commerce since the Guides were last revised in 1990. Another change reflects the Supreme Court's most recent interpretation of the Robinson-Patman Act, emphasizing that the Act is geared to prevent harm to competition more than the harm to individual competitors.1 Some changes simply correct typographical errors. The FTC made clear that it did not consider the process of reviewing its guidelines to be an appropriate occasion for making more substantive changes to the rules.

The following are some of the most significant changes.

Slotting Allowances. The Commission added an example to section 240.7 of the Guides that illustrates the services and facilities covered by the Robinson-Patman Act. The Commission did this to make clear that a payment to a retailer to add a new product constitutes a discount that is subject to the rules on price discrimination, while payment to the retailer to display the product in a prominent position within the store constitutes a promotional allowance that is subject to the rules on discrimination in providing promotional support. A claim for violation of the statutory provisions on price discrimination requires a showing of likely injury to competition, while violation of the provisions on discrimination in providing promotional allowances, services or facilities is a per se offense and does not require such a showing.

Special Packaging. The Commission added two other examples to section 240.7 to clarify that special packaging primarily designed to promote sales—such as Halloween packaging—constitutes a promotional service or facility subject to the Robinson-Patman Act, while packaging primarily designed to make stacking and shipping more efficient does not, and is therefore outside the coverage of the Act. (Within weeks of the appearance of these Guides, a lawsuit was filed in the Western District of Wisconsin claiming that Clorox's refusal to sell "club packs" to a warehouse-sized supermarket, while selling them to nearby club stores, violated sections 2(d) and 2(e) of the Act, citing the new Guides.)

Online Advertising. The Commission added "online advertising" to its list of promotional services and facilities covered by the Robinson-Patman Act, which also includes cooperative advertising, handbills, displays and special packaging. The Commission never defined "online advertising" but, if experience with other forms of advertising is any guide, presumably it would include both the actual provision of online advertising and reimbursement for the expense of online advertising, whether on the buyer's or seller's website or on third-party websites.

Alternative Arrangements. The Commission changed section 240.8, which had provided that alternative support should be made available to customers that cannot, in a practical sense, take advantage of "some" of the seller's promotional offerings. The section now provides that alternative support should be made available to customers that cannot take advantage of "any" of the seller's offerings. If a customer can take advantage of some of the offerings, there is no need to provide others.

Featured Customers. The Commission revised section 240.9, which had provided that a seller should not feature certain customers in its own advertising without making the "same service" available on proportionally equal terms to all competing customers, by changing the "same service" to the "same, or if impracticable, alternative services." The Commission recognized that featuring all of a seller's customers may be impracticable when those customers are too numerous.

Availability to E-tailers. The Commission revised its first example under section 240.10, which illustrates how sellers can make alternative promotional support available to customers that are unable to use some of the alternatives being offered. The Commission previously had instructed sellers to offer "alternative(s) on proportionally equal terms that are useable in a practical sense" by those customers that could not use the other alternatives. Now, the Commission specifically added that "some customers are online retailers that cannot make practical use of radio, TV, or newspaper advertising. The manufacturer should offer them proportionally equal alternatives, such as online advertising, that are useable by them in a practical sense." Again, the term "online advertising" is not defined.

In the third example under section 240.10, the Commission added allowances for "websites" to the list of "allowances for other media and services" that may be offered to small customers as alternatives to allowances for newspaper advertising. The Commission did not specify whether "websites" refers to allowances for creating or improving the customer's own website, allowances to pay for advertising on third-party websites, both, or something else.

Notice. The Commission clarified that despite the widespread use of the Internet, the seller's obligation to provide notice to customers of the availability of promotional support may not be satisfied simply by posting notices on the seller's website. However, the Commission added that it is permissible to provide such notice on shipping containers or other packaging with directions to check the seller's website for further details.

Buyer Liability. The Robinson-Patman Act makes buyers liable for inducing unlawful price discrimination in their favor, but is silent on inducing discriminatory promotional support. However, the FTC has pursued such conduct as violating the FTC Act. This has created an issue as to whether there must be a showing of likely injury to competition to support such a claim, since the Robinson-Patman Act requires such a showing for a claim of price discrimination but not for a claim of discrimination in providing promotional support. The Commission took this opportunity to clarify that it will proceed under the FTC Act against a customer that knowingly accepts discriminatory promotional support only "where there is likely injury to competition."

Disguised Price Discrimination. The Commission clarified that, as several courts previously have held, a purported promotional allowance may be re-classified as a discount where the customer is not required to perform commensurate promotional activity in order to receive the money. Because inducement of such a payment could expose a buyer to suits for private damages for price discrimination (under section 2(f) of the Robinson-Patman Act), the Commission found it appropriate to "remedy the Guides' possible implication to the contrary." The Commission added, in section 240.13, that "the giving or knowing inducement or receipt of proportionally unequal promotional allowances may be challenged under sections 2(a) and 2(f) of the Act, respectively, where no promotional services are preformed in return for the payments, or where the payments are not reasonably related to the customer's cost of providing the promotional services."

The Commission also added two references to "the Internet" in section 240.13, describing the potential liability of customers and third parties for the use of fictitious rates to induce undeserved (and therefore discriminatory) advertising allowances. The Commission added "the Internet" to its list of "advertising medium" and observed that there can be fictitious rates submitted by customers for "the purchase of advertising with a newspaper or other advertising medium, such as the Internet" and by an "advertising medium" itself, "such as the Internet, a newspaper, broadcast station, or printer of catalogues."

Section 240.13(b) now provides, "An advertising medium, such as the Internet, a newspaper, broadcast station, or printer of catalogues, that publishes a rate schedule containing fictitious rates" may violate section 5 of the FTC Act. This seems a curious use of the term "the Internet," since "the Internet" does not publish a rate schedule. Thus, although the Commission emphasized that "the emergence of the Internet as an important retail sales and communications channel" was a prime motivation for revising the Guides, its use of the assorted terms "online advertising," "Internet advertising," "website" and "the Internet" could prove confusing in application.

The comments that the Commission invited last year urged many other changes, and many of those might have made compliance easier. Instead, the Commission limited itself to "modest" corrections and clarifications, specifically rejecting some proposals and more broadly observing that the periodic review of FTC guides is not the proper occasion for a substantive rewrite. Until such an occasion presents itself, the business community will need to continue operating under the Fred Meyer playbook.


1 Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc., 546 US 164 (2006).

Originally published 2 March, 2015

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2015. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions