FTC Brand ‘Slotting’ Decision Penalizes Small Businesses

04 July 2002

US Senator Kit Bond (Republican, Missouri) is up in arms over the Federal Trade Commission’s rejection of a petition from small businesses to rein-in the practice of brand ‘slotting’ by manufacturers and retailers.

It is routine for retailers – notably supermarkets, grocers, convenience store and drug stores, even gas stations – to charge packaged goods manufacturers a fee for slotting their products into prime shelf or display positions.

Shoppers’ buying decision are greatly influenced by this, although few are conscious of the fact; and even fewer that brand owners pay for such preferential treatment.

This, argues Bond, favors the big boys who can afford the (often astronomic) fees demanded by retailers. So the Senator is all the more incensed that the FTC last week gave a thumbs-down to the petition to enforce a limitation on slotting charges within the grocery industry. This was filed by three groups representing independent bakers, tortilla makers and chewing gum manufacturers.

“This response sends a chill up the spine of small manufacturers whose ability to bring their products to consumers is being whittled away by companies controlling dominant shares of the marketplace,” Bond railed.

His ire is fuelled by the fact that the Senate Small Business and Entrepreneurship Committee, of which he was formerly chairman, last year added money to the FTC budget specifically to examine slotting. The FTC insists it is still studying the effect of slotting fees and has requested information from marketers and groceries on its effect.

Data sourced from: AdAge.com; additional content by WARC staff