California State Senator Figueroa (D-Fremont), Chair of the California Senate’s Business and Professions Committee, has introduced SB 582, a bill that would require retailers to disclose “slotting allowances” paid by suppliers. Slotting allowances are payments a supplier makes to a retailer for placement of the supplier’s product on the retailer’s shelves.

SB 582 is described by the California Legislative Counsel’s Digest as follows:

“This bill would require a retailer to disclose to a qualified supplier or manufacturer, upon its request, the placement fees or arrangements and trade information, as defined, relating to products of other suppliers or manufacturers that are placed on the retailer’s premises and are similar in character to the product of the qualified suppler or manufacturer. The bill would authorize the assessment of a civil penalty in the amount of $10,000 in an action brought by the Attorney General or by a qualified supplier or manufacturer for the violation of these provisions.”

As originally proposed, SB 582 would have added a section to California’s Unfair Practices Act (Business and Profession Code § 17001, et seq.), which provides for treble damages and attorneys’ fees. The bill has now been amended to remove it from the Unfair Practices Act and to add a Chapter to the Unfair Competition Law (proposed Section 17300, et seq.), that provides for a penalty of $10,000 and an award of attorneys’ fees and costs.

The bill would require that retailers disclose “placement fees or arrangements” and “trade information.”

“Placement fees or arrangements” are defined as “a promise of shelf space, specific shelf placement, guaranteed advertising, payment to maintain a product on a shelf, slotting fees, or any other benefit provided by either the retailer or the supplier or manufacturer of a product for reasons other than the volume of sales of the product. A free product or a product discounted below 75 percent of its standard wholesale price is a placement fee unless a free or discounted product is provided in proportion to the amount of the product sold at its standard wholesale price.” Section 17300(a).

“Trade information” is defined as “all retail pricing, sales volume and promotion information for all similar products within specific stores, a grouping of stores, or stores owned by either the retailer or other parties.” Section 17300(f).

Authored by:
Thomas D. Nevins
415-774-3284
tnevins@sheppardmullin.com