[Code of Federal Regulations]
[Title 16, Volume 1]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 16CFR240.4]

[Page 163-164]
 
                     TITLE 16--COMMERCIAL PRACTICES
 
                   CHAPTER I--FEDERAL TRADE COMMISSION
 
PART 240_GUIDES FOR ADVERTISING ALLOWANCES AND OTHER MERCHANDISING 
PAYMENTS AND SERVICES--Table of Contents
 
Sec. 240.4  Definition of customer.

    A customer is any person who buys for resale directly from the 
seller, or the seller's agent or broker. In addition, a ``customer'' is 
any buyer of the seller's product for resale who purchases from or 
through a wholesaler or other intermediate reseller. The word 
``customer'' which is used in section 2(d) of the Act includes 
``purchaser'' which is used in section 2(e).

    Note: There may be some exceptions to this general definition of 
``customer.'' For example, the purchaser of distress merchandise would 
not be considered a ``customer'' simply on the basis of such purchase. 
Similarly, a retailer or purchasing solely from other retailers, or 
making sporadic purchases from the seller or one that does not regularly 
sell the seller's product, or that is a type of retail outlet not 
usually selling such products (e.g., a hardware store stocking a few 
isolated food items) will not be considered a ``customer'' of the seller 
unless the seller has been put on notice that such retailer is selling 
its product.
    Example 1: A manufacturer sells to some retailers directly and to 
others through wholesalers. Retailer A purchases the manufacturer's 
product from a wholesaler and resells some of it to Retailer B. Retailer 
A is a customer of the manufacturer. Retailer B is not a customer unless 
the fact that it purchases the manufacturer's product is known to the 
manufacturer.
    Example 2: A manufacturer sells directly to some independent 
retailers, to the headquarters of chains and of retailer-owned 
cooperatives, and to wholesalers. The manufacturer offers promotional 
services or allowances for promotional activity to be performed at the 
retail level. With respect to such services and allowances, the direct-
buying independent retailers, the headquarters of the chains and 
retailer-owned cooperatives, and the wholesaler's independent retailer 
customers are customers of the manufacturer. Individual retail outlets 
of the

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chains and the members of the retailer-owned cooperatives are not 
customers of the manufacturer.
    Example 3: A seller offers to pay wholesalers to advertise the 
seller's product in the wholesalers' order books or in the wholesalers' 
price lists directed to retailers purchasing from the wholesalers. The 
wholesalers and retailer-owned cooperative headquarters and headquarters 
of other bona-fide buying groups are customers. Retailers are not 
customers for purposes of this promotion.