[Code of Federal Regulations]
[Title 16, Volume 1]
[Revised as of January 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 16CFR240.5]

[Page 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. 240.5  Definition of competing customers.

    Competing customers are all businesses that compete in the resale of 
the seller's products of like grade and quality at the same functional 
level of distribution regardless of whether they purchase directly from 
the seller or through some intermediary.

    Example 1: Manufacturer A, located in Wisconsin and distributing 
shoes nationally, sells shoes to three competing retailers that sell 
only in the Roanoke, Virginia area. Manufacturer A has no other 
customers selling in Roanoke or its vicinity. If Manufacturer A offers 
its promotion to one Roanoke customer, it should include all three, but 
it can limit the promotion to them. The trade area should be drawn to 
include retailers who compete.
    Example 2: A national seller has direct-buying retailing customers 
reselling exclusively within the Baltimore area, and other customers 
within the area purchasing through wholesalers. The seller may lawfully 
engage in a promotional campaign confined to the Baltimore area, 
provided that it affords all of its retailing customers within the area 
the opportunity to participate, including those that purchase through 
wholesalers.
    Example 3: B manufactures and sells a brand of laundry detergent for 
home use. In one metropolitan area, B's detergent is sold by a grocery 
store and a discount department store. If these stores compete with each 
other, any allowance, service or facility that B makes available to the 
grocery store should also be made available on proportionally equal 
terms to the discount department store.