[Billing Code 6750-01]

FEDERAL TRADE COMMISSION

Public Workshop: Slotting Allowances and Other Grocery Marketing Practices:

When Should They Raise Antitrust Concerns?

AGENCY: Federal Trade Commission

ACTION: Notice Announcing Workshop

SUMMARY: The Federal Trade Commission has set May 31 and June 1 as the dates for its public workshop examining the appropriate antitrust assessment of slotting allowances, category management, and other grocery marketing practices.

DATES: The workshop will be held on May 31 and June 1 in the Commission Meeting Room (Room 432), 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

FOR PANEL PARTICIPATION OR FURTHER INFORMATION CONTACT: To obtain information about possible panel participation or for questions about the workshop, please contact: David Balto, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580, telephone 202-326-2881, e-mail dbalto@ftc.gov; or William Cohen, Office of Policy Planning, Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580, telephone 202-326-2110, e-mail wcohen@ftc.gov.

SUPPLEMENTARY INFORMATION:

PUBLIC WORKSHOP

SLOTTING ALLOWANCES
AND OTHER GROCERY MARKETING PRACTICES:
WHEN SHOULD THEY RAISE ANTITRUST CONCERNS?

Overview

In recent years, debate has continued about when slotting allowances and other grocery marketing practices appropriately raise antitrust concerns and thus pose potential matters for antitrust enforcement. The Commission last held hearings in this area in November, 1995, and this past fall, both the Senate Small Business Committee and the House Judiciary Committee held hearings that addressed several issues, including antitrust issues, in connection with slotting allowances.

The term "slotting allowance" typically refers to a lump-sum, up-front payment that a food manufacturer must pay to a supermarket for access to its shelves. Very often, debates over slotting allowances have assumed that all slotting allowances, and all of the market conditions in which they are used, are the same. In fact, the term "slotting allowance" has been used to cover an extremely broad range of conduct, some of it clearly unlawful as commercial bribery, some clearly lawful, and a great deal of it in the gray area in between, the antitrust legality of which can be determined only in light of all the surrounding facts and circumstances. At the same time, the legal and economic literature on the appropriate antitrust analysis of these practices has not been as well developed as would be desirable.

The FTC plans to convene a workshop that will focus on the antitrust implications of slotting allowances and other grocery marketing practices, such as category management, in which retailers engage particular manufacturers to provide advisory or decision-making functions in determining how best to market certain products of a type produced by those manufacturers. The workshop is intended to facilitate a discussion among manufacturers and retailers (both small and large businesses), consumer groups, marketing experts, economists, and lawyers that will increase factual knowledge and illuminate the relevant antitrust issues with respect to these and other grocery marketing practices. The format will consist of panel presentations and discussions, which will include participation by attendees.

The goal of the workshop is to gain a better understanding of the types of slotting allowances and other grocery marketing practices that are used, the reasons for which they are used, and the criteria for assessing wether slotting allowances or other grocery marketing practices raise antitrust concerns. Interested parties are invited to participate or attend.

Specific Questions To Be Asked

The workshop will address the following questions, among others:

• What are the different types of slotting allowances, and what prompts the use of one type rather than another?
• Are slotting allowances used for both new and established products? In what proportion?
• How do slotting allowances vary from other types of product promotion, and what circumstances lead to the use of slotting allowances rather than other types of product promotion?
• How do slotting allowances vary from market to market?
• What is the impact of slotting allowances on new product development and innovation?
• Do slotting allowances significantly increase the capital costs f entry or doing business in particular markets? If so, how do capital markets respond?
• How do supermarkets ultimately use the fees they receive as slotting allowances?
• Under what circumstances do slotting allowances have an impact on prices to consumers and consumer demand? What is the impact?
• Are slotting allowances sometimes paid in order to obtain exclusivity and , arguably, market power?
• If slotting allowances were prohibited, would that lead to material differences in the bargaining relationship between manufacturers and retailers-or would discounts to retailers simply take a different form?
• What other types of grocery marketing practices-such as category management-may raise antitrust concern? What are those marketing practices, and under what circumstances might they pose antitrust issues?

The Commission welcomes suggestions for other questions that should be addressed as well.

By direction of the Commission.

Donald S. Clark

Secretary