Transcript Food Marketing Regulations

FOOD MARKETING
REGULATIONS

Types of
regulations
– Economic
– Food safety
– Consumer
protection
– Intellectual
property

Regulating
agencies
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FOOD MARKETING REGULATIONS
Lars Perner, Instructor
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Types of Food Marketing
Regulations

Food quality and
safety

– Food contents
– Handling
– Labeling

Fair competition laws
– Anti-monopoly
– Price discrimination
– Collective negotiations
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Consumer price
regulations
– Minimum
– Maximum (?)
– Price maintenance

Advertising and
promotion
– Standards for deceptive
advertising
– Disclosure requirements
FOOD MARKETING REGULATIONS
Lars Perner, Instructor
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Fair Competition
 Anti-monopoly
laws
– Outright monopoly
– Concentration
– Collusion
 Boycott
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Break-up of
monopolies or
large share firms
Review of mergers
and acquisitions
prohibitions
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Levels of Competition
– Agricultural suppliers and service (e.g.,
transportation)
– Large scale purchasers
– Farmers supplying larger buyers
 Permitted
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to negotiate jointly
FOOD MARKETING REGULATIONS
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Price Discrimination
Robinson-Patman Act: Equal price
treatment to all buyers who compete
against each other unless discounts are
justified by price savings (e.g., volume
discounts)
 Permissible to charge non-competing
buyers different prices—eg. institutional
buyers such as hospitals do not compete
with food manufacturers

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FOOD MARKETING REGULATIONS
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Price Maintenance
Manufacturers may establish minimum
retail prices for foods
 Retailers may not agree to charge this
minimum (thus no conspiracy)
 Manufacturers may “cut off” retailers who
sell below the minimum but may not
reinstate in return for a promise to charge
minimum (a conspiracy)
 Usually not practically useful in most of
today’s markets

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Regulations to Protect Smaller
Retailers
 U.S.
– Minimum prices
– Restrictions on selling below cost
 In
some countries
– Store size regulations
– Opening hours
– Advertising restrictions
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FOOD MARKETING REGULATIONS
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State or Federal Minimum Prices



Some jurisdictions set minimum prices for certain
specific products
Usually to protect small merchants
Minimum prices will upset the supply-demand
equilibrium if demand is elastic (reduction in
category sales)
Supply and Demand Curves
10
Price
Reduced
Quantity
12
Supply
Minimum price
8
6
4
Demand
2
0
0
20
40
Equilibrium quantity
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60
Quantity
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80
100
120
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Maximum Prices





Used in some countries and during war periods
in the U.S.
Greater concern is usually with prices being too
low
U.S. laws generally favor competition to reduce
prices
Affordability problems for poor can be more
effectively addressed by welfare payments
May impact supply of goods depending on supply
elasticity (especially for retail operations in high
cost, inner city areas)
Supply and Demand Curves
12
Shortage
Price
10
Demand with
welfare payments
Supply
8
6
4
Demand
2
0
0
20
40
60
Quantity
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80
100
120
Equilibrium price
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Intellectual Property Laws

Patents
– Exclusive right to use technology or process
developed for a specified period of time
– Intended to provide incentive to innovate
– International variations in standards

Trademarks
– Right to use “vigorously defended” term—
actual rules are complicated

Copyrights
– Limited applicability to food products
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Tax Laws
 Tax
breaks to promote survival of
family farms—e.g.,
– Delayed or reduced inheritance tax on
farm value
– Accelerated depreciation
– Tax credits for investments
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Some Federal Regulatory Agencies

U.S. Department of Agriculture
– Food Safety Inspection Service
Department of Justice
 Federal Trade Commission
 Interstate Commerce Commission
 Internal Revenue Service
 Environmental Protection Agency
 U.S. Department of Labor
 Occupational Health and Safety
Administration

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