16 C.F.R. § 240.9

Proportionally equal terms

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(a) Promotional services and allowances should be made available to all competing customers on proportionally equal terms. No single way to do this is prescribed by law. Any method that treats competing customers on proportionally equal terms may be used. Generally, this can be done most easily by basing the payments made or the services furnished on the dollar volume or on the quantity of the product purchased during a specified period. However, other methods that result in proportionally equal allowances and services being offered to all competing customers are acceptable.

(b) When a seller offers more than one type of service, or payments for more than one type of service, all the services or payments should be offered on proportionally equal terms. The seller may do this by offering all the payments or services at the same rate per unit or amount purchased. Thus, a seller might offer promotional allowances of up to 12 cents a case purchased for expenditures on either newspaper or Internet advertising or handbills.

Example 1:A seller may offer to pay a specified part (e.g., 50 percent) of the cost of local advertising up to an amount equal to a specified percentage (e.g., 5 percent) of the dollar volume of purchases during a specified period of time.Example 2:A seller may place in reserve for each customer a specified amount of money for each unit purchased, and use it to reimburse these customers for the cost of advertising the seller's product.Example 3:A seller should not provide an allowance or service on a basis that has rates graduated with the amount of goods purchased, as, for instance, 1 percent of the first $1,000 purchased per month, 2 percent of the second $1,000 per month, and 3 percent of all over that.Example 4:A seller should not identify or feature one or a few customers in its own advertising without making the same, or if impracticable, alternative services available on proportionally equal terms to customers competing with the identified customer or customers.Example 5:A seller who makes employees available or arranges with a third party to furnish personnel for purposes of performing work for a customer should make the same offer available on proportionally equal terms to all other competing customers or offer useable and suitable services or allowances on proportionally equal terms to competing customers for whom such services are not useable and suitable.Example 6:A seller should not offer to pay a straight line rate for advertising if such payment results in a discrimination between competing customers; e.g., the offer of $1.00 per line for advertising in a newspaper that charges competing customers different amounts for the same advertising space. The straight line rate is an acceptable method for allocating advertising funds if the seller offers small retailers that pay more than the lowest newspaper rate an alternative that enables them to obtain the same percentage of their advertising cost as large retailers. If the $1.00 per line allowance is based on 50 percent of the newspaper's lowest contract rate of $2.00 per line, the seller should offer to pay 50 percent of the newspaper advertising cost of smaller retailers that establish, by invoice or otherwise, that they paid more than that contract rate.Example 7:A seller offers each customer promotional allowances at the rate of one dollar for each unit of its product purchased during a defined promotional period. If Buyer A purchases 100 units, Buyer B 50 units, and Buyer C 25 units, the seller maintains proportional equality by allowing $100 to Buyer A, $50 to Buyer B, and $25 to Buyer C, to be used for the Buyers' expenditures on promotion.

Notes of Decisions

Cited in 7 cases (1 in the last 5 years), 1974–2025 · leading case: Am. Booksellers Ass'n v. Barnes & Noble, Inc., 135 F. Supp. 2d 1031 (N.D. Cal. 2001).

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Am. Booksellers Ass'n v. Barnes & Noble, Inc., 135 F. Supp. 2d 1031 (N.D. Cal. 2001). · cites it 4× “The court relied on language from 16 C.F.R. § 240.9 (1984), however, without recognizing or acknowledging that the language was deleted from the rule in 1990.”

Orologio of Short Hills Inc. v. Swatch Grp. (U.S.) Inc., 653 F. App'x 134 (3rd Cir. 2016). · cites it 3× “16 C.F.R. § 240.9 (allowing “[a]ny method that treats competing customers on proportionally equal terms” and suggesting that “basing the payments made .”

Intimate Bookshop, Inc. v. Barnes & Noble, Inc., 88 F. Supp. 2d 133 (S.D.N.Y. 2000). “See 16 C.F.R. § 240.9 (1984) (“Allowances that have no relationship to cost or approximate cost of the service provided by the retailer may be considered to be in violation of section 2(d) or subject to the prohibitions of section 2(a).”

Alterman Foods, Inc. v. Fed. Trade Comm'n, 497 F.2d 993 (5th Cir. 1974). “467 (1945) Commission Guide 9, 16 C.F.R. § 240.9 .”

LS Amster & Co., Inc. v. McNeil Labs., Inc., 504 F. Supp. 617 (S.D.N.Y. 1980). “(c) When a seller, in good faith, offers a basic plan, including alternatives, which is reasonably fair and nondiscriminatory, and refrains from taking any steps which would prevent any customer, or class of customers, from participating in his program, he shall be deemed to…”

Portland 76 Auto/Truck Plaza, Inc. v. Union Oil Co., 153 F.3d 938 (9th Cir. 1998). · cites it 2× “16 C.F.R. § 240.9 . Because the regulation expressly provides that the list is not exhaustive, it cannot be read pursuant to the principle expressio uni-us est exclusio alterius.”

U.S. Wholesale Outlet & Distrib., Inc. v. Innovation Ventures, LLC (C.D. Cal. 2025). · cites it 4× “Living Essentials cites 16 C.F.R. § 240.9 to argue that the promotions 7 were tailored to the different needs of Plaintiffs and Costco, and therefore, were still 8 proportionally equal.”

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