Slotting Fees

The food retail industry practice of “slotting fees,” as it relates to the produce industry, needs further investigation and study by the federal government. Slotting fees are payments made by food producers and manufacturers to purchase shelf space in retail stores. Critics regard slotting fees as unearned store discounts that give a competitive edge to larger manufacturers who can afford them, while depriving consumers of variety, new product innovations, and possibly more competitive retail pricing. Supporters of the fees contend that they enable stores to make room for the thousands of new products introduced annually protecting grocers from having to shoulder all the risk of stocking items that may not sell.

Slotting-fees are a controversial issue in the food sector and are simply not applicable to the fruit and vegetable industry. These fees are structured for food and grocery manufacturers that have a fixed list price for their products. The produce industry, however, is subject to a fluctuating daily market price based on supply and demand for a perishable product. Since produce sellers cannot store their product in a warehouse waiting for a price increase to recoup losses and discounts they do not have the capability of predicting long term prices to reliably cover slotting fees.

The Robinson-Patman Act requires sellers of any product to offer the same terms to all competitive customers. If a retailer demands a special pre-purchase request from a produce grower/supplier in order to secure business, another retailer — whose retail volumes, customer flow, or other economic factors might not warrant the grower/supplier paying similar slotting fees — may take action against that grower/supplier under these antitrust laws if not offered the same ‘deal’ as other retailers. The current system is not suited to the retail practice of slotting fees.

In order to protect growers, packers and shippers, suppliers, and retailers in their goal to serve the consumer, NASDA recommends that the necessary resources be dedicated to investigate and report on the status of the retail industry as it relates to the sale of fruits and vegetables. Specifically, NASDA requests Congress further pursue an investigation of slotting-fees and other “off-invoice” fees in light of an inconclusive September 2000 GAO report on the issue. The inability of GAO to collect sufficient data from retailers to respond to a congressional request indicates that this matter needs further federal attention.