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Discounts and Allowances
Petitioner negotiates with individual vendors to obtain
discounts and allowances (without distinction, discounts) from
the list prices advertised by the vendors. Thus, for example,
for a limited time, a vendor of canned goods may offer $1 off on
each case of its 16-oz. cans of peaches ordered.
Except with respect to certain special price discounts
offered by vendors only at the food shows and described in the
next paragraph, vendor discounts on merchandise purchased by
petitioner reduce the price paid by (invoiced to) petitioner and
are referred to by petitioner as “off-invoice” (off-invoice)
discounts. Petitioner passes on to member stores off-invoice
discounts it obtains from vendors unless the associated
administrative costs exceed the amount of the discount.
Hereafter, we shall use the term “usual discount” to describe any
vendor discount other than the special price discounts offered
only at the food shows.
Food Shows-–General
Beginning in 1984 and extending at least through the audit
years, petitioner held one or more food shows a year at which
vendors and member stores met. One purpose of those shows was to
encourage member stores to place orders with petitioner for the
products that vendors promoted at the shows. The food shows held
during the audit years were held in Amarillo, Texas.
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Last modified: November 10, 2007