2011-21020. Retail Food Store Advertising and Marketing Practices Rule

AGENCY:

Federal Trade Commission (“FTC” or “Commission”).

ACTION:

Advance notice of proposed rulemaking; request for public comment.

SUMMARY:

As part of the Commission's systematic review of all current FTC rules and guides, the Commission requests public comment on the overall costs, benefits, necessity, and regulatory and economic impact of the FTC's rule for “Retail Food Store Advertising and Marketing Practices” (“Unavailability Rule” or “Rule”).

DATES:

Comments must be received on or before October 19, 2011.

ADDRESSES:

Interested parties may file a comment online or on paper, by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Write “16 CFR Part 424—Retail Food Store Advertising Rule, Project No. P104203” on your comment, and file your comment online at https://ftcpublic.commentworks.com/​ftc/​unavailabilityruleanpr,, by following the instructions on the web-based form. If you prefer to file your comment on paper, mail or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex N), 600 Pennsylvania Avenue, NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Jock Chung, [phone], Attorney, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

I. Background

The Unavailability Rule states that it is an unfair or deceptive act or practice for “retail food stores” to advertise “food, grocery products or other merchandise” at a stated price if those stores do not have the advertised products in stock and readily available to consumers during the effective period of the advertisement. The original Rule, promulgated in 1971,^[1] permitted food retailers to defend against a charge of failure to have items available by maintaining records showing that the advertised items were timely ordered and delivered in quantities sufficient to meet reasonably anticipated demand.^[2]

In 1989, after a comment period and public hearings, the Commission concluded that the costs of complying with the original Rule exceeded the benefits to consumers and amended the Rule.^[3] The Rule now provides that even if stores do not have the advertised products in stock and readily available during the effective period of their advertisement, they comply with the Rule if “the advertisement clearly and adequately discloses that supplies of the advertised products are limited or the advertised products are available only at some outlets.” ^[4] In addition, the amendment provides that it would not be a rule violation if: (1) The store ordered the advertised products in adequate time for delivery in quantities sufficient to meet reasonably anticipated demand; (2) the store offers a “raincheck” for the advertised products; (3) the store offers a comparable product at the advertised price or at a comparable price reduction; or (4) the store offers other compensation at least equal to the advertised value.^[5] The Commission stated that the amended Rule “will not significantly reduce consumer protection because injury caused by such instances of unexpected unavailability * * * will be substantially mitigated by the amended Rule's requirement that consumers be offered rainchecks or comparable substitute items.” ^[6]

II. Regulatory Review Program

The Commission reviews its rules and guides periodically. These reviews seek information about the costs and benefits of the rules and guides as well as their regulatory and economic impact. These reviews assist the Commission in identifying rules and guides that warrant modification or rescission. Therefore, the Commission now solicits comments on, among other things, the economic impact of, and the continuing need for, the Unavailability Rule; the benefits of the Rule to consumers purchasing products at retail food stores; and the burdens the Rule places on firms subject to its requirements.

III. Request for Comments

The Commission solicits comments on the following specific questions related to the Unavailability Rule:

(1) Is there a continuing need for the Rule? Why or why not?

(2) What benefits has the Rule provided to consumers, or what significant costs has the Rule imposed on consumers? Provide any evidence that supports your position.

(3) What modifications, if any, should the Commission make to the Rule to increase its benefits or reduce its costs to consumers?

(a) Provide any evidence that supports your proposed modifications.

(b) How would these modifications affect the costs and benefits of the Rule for consumers?

(c) How would these modifications affect the costs and benefits of the Rule for businesses, particularly small businesses?

(4) What impact has the Rule had on the flow of truthful information to consumers and on the flow of deceptive information to consumers? Provide any evidence that supports your position.

(5) What benefits, if any, has the Rule provided to businesses, or what significant costs, including costs of compliance, has the Rule imposed on businesses, particularly small businesses? Provide any evidence that supports your position.

(6) What modifications, if any, should be made to the Rule to increase its benefits or reduce its costs to businesses, particularly small businesses?

(a) Provide any evidence that supports your proposed modifications.

(b) How would these modifications affect the costs and benefits of the Rule for consumers?

(c) How would these modifications affect the costs and benefits of the Rule for businesses, particularly small businesses?

(7) Provide any evidence concerning the degree of industry compliance with the Rule. Does this evidence indicate that the Rule should be modified? If so, why, and how? If not, why not?

(8) Provide any evidence concerning whether any of the Rule's provisions are no longer necessary. Explain why these provisions are unnecessary.

(9) What potentially unfair or deceptive practices, not covered by the Rule, concerning price advertising of products by retail food stores are occurring in the marketplace?

(a) Provide any evidence, such as empirical data, consumer perception studies, or consumer complaints, that demonstrates the extent of such practices.

(b) Provide any evidence that demonstrates whether such practices cause consumer injury.

(c) With reference to such practices, should the Rule be modified? If so, why, and how? If not, why not?

(10) Should the Commission broaden the Rule to include stores not currently covered, such as drugstores, department stores, electronics retailers, etc.? Provide any evidence that supports your position.

(11) What modifications, if any, should be made to the Rule to account for current or impending changes in technology or economic conditions?

(a) Provide any evidence that supports your position.

(b) How would these modifications affect the costs and benefits of the Rule for consumers and businesses, particularly small businesses?

(12) Does the Rule overlap or conflict with other federal, state, or local laws or regulations? If so, how?

(a) Provide any evidence that supports your position.

(b) With reference to the asserted conflicts, should the Rule be modified? If so, why, and how? If not, why not?

(c) Provide any evidence concerning whether the Rule has assisted in promoting national consistency with respect to the advertising by retail food stores of products for sale at a stated price.

You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before October 19, 2011. Write “16 CFR Part 424—Retail Food Store Advertising Rule, Project No. P104203” on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at http://www.ftc.gov/​os/​publiccomments.shtm. As a matter of discretion, the Commission tries to remove individuals' home contact information from comments before placing them on the Commission Web site.

Because your comment will be made public, you are solely responsible for making sure that your comment doesn't include any sensitive personal information, such as anyone's Social Security number, date of birth, driver's license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment doesn't include any sensitive health information, like medical records or other individually identifiable health information. In addition, don't include any “[t]rade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential,” as provided in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, don't include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names.

If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).^[7] Your comment will be kept confidential only if the FTC General Counsel, in his or her sole discretion, grants your request in accordance with the law and the public interest.

Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at https://ftcpublic.commentworks.com/​ftc/​unavailabilityruleanpr,, by following the instructions on the Web-based form. If this Notice appears at http://www.regulations.gov/​#!home,, you also may file a comment through that Web site.

If you file your comment on paper, write “16 CFR Part 424—Retail Food Store Advertising Rule, Project No. P104203” on your comment and on the envelope, and mail or deliver it to the following address: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex N), 600 Pennsylvania Avenue, NW., Washington, DC 20580. If possible, submit your paper comment to the Commission by courier or overnight service.

Visit the Commission Web site at http://www.ftc.gov to read this Notice and the news release describing it. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before October 19, 2011. You can find more information, including routine uses permitted by the Privacy Act, in the Commission's privacy policy, at http://www.ftc.gov/​ftc/​privacy.htm.

List of Subjects in 16 CFR Part 424

• Advertising
• Foods
• Trade practices

Authority: 15 U.S.C. 41-58.

By direction of the Commission.

Donald S. Clark,

Secretary.

Footnotes

1.  Federal Trade Commission: Retail Food Store Advertising and Marketing Practices: Statement of Basis and Purpose: The Rule, 36 FR 8777 (May 13, 1971). The Rule became effective on July 12, 1971.

2.  Id. at 8781.

3.  Federal Trade Commission: Amendment to Trade Regulation Rule Concerning Retail Food Store Advertising and Marketing Practices, 54 FR 35456 (Aug. 28, 1989).

4.  Id. at 35467.

5.  Id. at 35467-35468.

6.  Id. at 35457. Although the majority of the Commission voted to amend the Rule, Commissioner Calvani dissented, stating that “existing market forces adequately police unavailability, and * * * therefore, no Federal Trade Commission rule is necessary, amended or otherwise.” Id. at 35468. Conversely, Commissioner Strenio dissented, stating that there was “insufficient evidence * * * to conclude that these changes will result in net consumer benefits;” thus, he could not support these amendments. Id.

7.  In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c), 16 CFR 4.9(c).