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The American Antitrust Institute and the Journal of Public Policy & Marketing hosted a roundtable discussion on antitrust and category captains at the National Press Club in Washington, D.C.
Category management and category captains. Reflecting the dramatic changes in the marketplace for consumer packaged goods during the 1990s, category management-like slotting fees-has emerged as a widespread business practice. Category management is a process for managing product categories as strategic business units. Profits are maximized by customizing these product categories on a store-by-store basis and by delivering consumer value. Experts say successful category management is best achieved when retailers and suppliers collaborate. Category captain arrangements often involve collaboration between a retailer and a single supplier playing a significant role in the management of the category. The exclusivity and extent of the category captain’s role varies, depending on the relationship and/or agreement between the captain and retailer. In some instances, retailers may entrust critical merchandising decisions to the major supplier in each category. Often, the supplier pays the retailer to obtain the captain’s role.
Antitrust relevance and debate. The Supreme Court has recognized the antitrust problems that may arise from certain category captain arrangements. The Court recently refused to review a $1.05 billion antitrust award against the United States Tobacco Co. Conwood Co. filed the suit, alleging that United States Tobacco unfairly dominated the smokeless tobacco industry through its category captain arrangement. The damage award, reported by The Wall Street Journal as possibly the largest verdict ever upheld under antitrust law, marked the first time an appeals court condemned as an antitrust violation a system that gives a company some control over merchandise displays of its own and competitors’ products. Category captain conduct was also at the heart of the case that R.J. Reynolds, Brown and Williamson and Lorillard filed against Philip Morris. The case was recently dismissed. Other category captain cases are pending and will be discussed.
Program objectives and topics. The workshop’s objective is to bring together knowledgeable stakeholders from antitrust, marketing, retailing and category management to
- Examine the antitrust questions in category management.
- Enhance understanding of the antitrust implications of category captain arrangements.
- Develop an informed approach for assessing these implications
- Chart a course for further understanding.
- Ravi Achrol, West Virginia University
- Charles Adams, General Accounting Office
- David Balto, White and Case, LLP
- Suman Basuroy, University at Buffalo
- Peter Carstensen, University of Wisconsin
- Paul Christman, Winston Weber Associates
- Dennis Cross, Stinson, Morrison, Hecker LLP
- Peter de la Cruz, Keller and Heckman, LLP
- Mark Denbaly, Economic Research Services, Department of Agriculture
- Debra Desrochers, University of Notre Dame
- Albert Foer, American Antitrust Institute
- Christopher Garmon, Federal Trade Commission
- Andrew Gavil, Howard University
- Ernest Gellhorn, George Mason University
- Richard Gooner, University of Alabama
- Kenneth Grigg, Patton Boggs, LLP
- Warren Grimes, Southwestern University
- Gregory Gundlach, University of Notre Dame
- Michael Guzman, Kellogg, Huber, Hansen, Todd & Evans, LLP
- Robert Lande, American Antitrust Institute
- Thomas B. Leary, Commissioner, Federal Trade Commission
- Christopher MacAvoy, Howrey Simon Arnold & White, LLP
- Oded Pincas, Federal Trade Commission
- Garret Rasmussen, Patton Boggs, LLP
- Irving Scher, Weil Gotshal & Manges LLP
- Tom Stanley, Eastham, Watson, Dale & Forney, LLP
- Bob Steiner, American Antitrust Institute
- Mary Sullivan, Department of Justice