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NACDS ENDORSES VOLUNTARY GUIDELINES SEEKING EQUAL RETAILER ACCESS TO PROMOTIONS, PRODUCT DEALS: "PROCLAMATION" WOULD INCLUDE OTCs, COSMETICS

Executive Summary

The National Association of Chain Drug Stores is endorsing a "nonbinding proclamation" to manufacturers and distributors of OTC drugs and cosmetics that retailers of different classes of trade be offered equal access to product promotions or deals. The statement recommends that "if a manufacturer develops prices, terms, promotions, deals or packs designed to meet the marketing needs or desires of a particular class of trade or distributor format, the manufacturer should inform all competing distributor customers within the same market area, regardless of class or trade, of their availability and should grant these distributors an equal opportunity to qualify for these offerings." Distributors, the statement continues, "should not request special prices, allowances or services which would force the manufacturer to discriminate unlawfully against other customers within the same market area." Developed by a joint industry committee representing NACDS and several grocery product associations, the "Inter-Industry Fairness Statement" was announced by NACDS at a May 8 press conference at the association's annual meeting in Palm Springs, California. The guidelines are endorsed by the Grocery Manufacturers of America, Food Marketing Institute, National Association of Convenience Stores, National American Wholesale Grocers' Association, National Food Brokers Association and National Grocers' Association. While grocery products are "primarily" the subject of the guidelines, "we are really talking about H&BAs or anything else sold in a similar vein," NACDS board member Philip Beekman (Hook-SupeRx) told the press briefing. "We, in drug stores at NACDS, sell an awful lot of products that food store retailers sell as well." Beekman noted that the guidelines are voluntary, but suggested that "complaints" regarding violations be fielded by NACDS. The association's support of the statement is a response to increasing competition from retailers such as deep discount outlets and "club stores," board member Jack Futterman (Supermarkets General) pointed out. "Over time, new business formats have blurred historic distinctions among traditional classes of trade," the statement says. "As a result, some classes of distributors within the same market area who formerly competed only indirectly or incidentally with traditional distributor formats now should be regarded as direct competitors." Beckman added that the statement would also address, for example, a situation where a toothpaste manufacturer might prepare large, shrink-wrapped packs of a product for big general merchandise chains such as Sears, Walmart or K mart, but might not offer such a package to drug store chains. "We want to know it exists and maybe we'll surprise them and buy it after all." Exclusive "tie-ins" that involve cooperative advertisement would also be addressed by the guidelines, Beekman added. Noting that many of the pricing and promotion deals at issue are covered by the Robinson Patman Act, Futterman emphasized that the statement is intended to "remind" companies about the law. The recommendations would apply even in those cases where Robinson Patman allows special deals, Beekman added. He pointed out: "Robinson Patman lets you reduce your price to a manufacturer if you can show genuine economies of scale for distribution, warehousing, or whatever . . . But I should be aware of the fact that [the price deal] is available in case I have the option to do it." The joint industry committee is also working on revising the 1983 Trade Practice Guidelines for the retail industry by the first quarter of 1990.
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