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could be paid reasonable and customary costs for sponsoring an
in-store sampling program at one of its shareholder's stores.
Under the Category Marketing Fund Agreement (CMFA) with P&G,
P&G created a promotional account for each brand listed in the
agreement; e.g, Bold, Dawn, and Downy. The amount paid into the
promotional account for each period was determined by multiplying
the stated funding rate by the number of cases of the specified
brands shipped to petitioner during the base period, with the
base period being the same period during the previous year.
Petitioner was entitled to payment from the promotional account
at a stated rate per case for various advertising and price
reduction activities; e.g., print media, broadcast media, and
price reduction on sales to retail outlets. Furthermore, P&G
authorized payment of petitioner's actual cost of various
activities from the promotional account, e.g., petitioner could
be paid reasonable and customary costs for sponsoring an in-store
sampling program at one of its shareholder's stores.
As indicated, the three written agreements between P&G and
petitioner provided that petitioner could withdraw from the
promotional accounts certain amounts for performing certain
enumerated activities. This was not, however, the entire
arrangement between petitioner and P&G's representative, Mr.
Davis. Instead, petitioner withdrew funds from the promotional
accounts if it performed under the terms of oral agreements it
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Last modified: May 25, 2011