Part 9. TEXAS LOTTERY COMMISSION
Chapter 402. CHARITABLE BINGO ADMINISTRATIVE RULES
Subchapter B. CONDUCT OF BINGO
The Texas Lottery Commission (Commission) proposes new Title 16, Part 9, Chapter 402, Subchapter B, §402.204 (relating to Prohibited Price Fixing). New §402.204 will provide additional information to manufacturers, distributors, and authorized organizations relating to Texas Occupations Code §2001.556 regarding prohibited price fixing. The proposed new rule is being filed concurrently with the withdrawal of an incorrect version of the proposed rule §402.204 which was published in the March 9, 2007, issue of the Texas Register (32 TexReg 1178). The rule is being withdrawn because it was the incorrect version of the proposed rule. It was not the version the Commission voted to propose for public comment. The error was discovered on April 4, 2007.
New subsection (a) sets forth definitions for horizontal price fixing, price fixing agreement, supplier, and vertical price fixing.
New subsection (b) sets forth prohibition of horizontal price fixing.
New subsection (c) sets forth prohibition of vertical price fixing.
New subsection (d) states that it is not a defense to horizontal or vertical price fixing that the fixed or agreed upon price is reasonable.
Finally, new subsection (e) addresses recordkeeping requirements.
The new rules are promulgated under Occupations Code §2001.054, which authorizes the Commission to adopt rules necessary to enforce and administer the Bingo Enabling Act.
Kathy Pyka, Controller, has determined that for the first five-year period there will be no significant fiscal impact for state or local government as a result of enforcing this new rule. Any costs to the State could be absorbed by current resources. There will be no adverse effect on small businesses, micro businesses, or local or state employment.
Philip D. Sanderson, Assistant Director of the Charitable Bingo Operations Division, has determined that for each of the first five years the new rules are in effect, licensees will benefit because the new section is designed to provide clarification relating to prohibited price fixing. The new rule will provide licensees with additional information to assist them in remaining in compliance with the Bingo Enabling Act and the Charitable Bingo Administrative Rules.
Comments on the proposed new rule may be submitted to Sandra Joseph, Assistant General Counsel, Texas Lottery Commission, P.O. Box 16630, Austin, Texas 78761-6630. Comments may also be submitted online at www.txlottery.org. The Commission will hold a public hearing on this proposal at 9:00 a.m. on May 2, 2007, at 611 E. 6th Street, Austin, Texas. Comments must be received within 30 days after publication of this proposed new rule in order to be considered.
The new section is proposed pursuant to Occupations Code §2001.054, which authorizes the Commission to adopt rules necessary to enforce and administer the Bingo Enabling Act.
The new rule implements Occupations Code, Chapter 2001.
§402.204.Prohibited Price Fixing.
(a) Definitions.
(1) horizontal price fixing--a price fixing agreement:
(A) between competitors on the same level of distribution, such as a price fixing agreement between two or more bingo equipment or supplies manufacturers; or
(B) between two or more bingo equipment or supplies distributors; or
(C) between two or more suppliers.
(2) price fixing agreement--an express or implied agreement to fix, set, control, maintain, or stabilize prices at any level.
(3) supplier--a licensed or unlicensed manufacturer or distributor of bingo equipment or supplies or any person, group, or entity with an ownership interest of 5% or greater in a manufacturer or distributor of bingo equipment or supplies.
(4) vertical price fixing--a price fixing agreement between parties on different levels of the same chain of distribution regarding the price that one of the parties will charge further down the distribution chain, such as an agreement between a bingo equipment or supplies manufacturer and a bingo equipment or supplies distributor regarding the price that the bingo equipment or supplies distributor will charge to the licensed authorized organization.
(b) Horizontal Price Fixing Prohibited.
(1) Horizontal price fixing agreements are prohibited.
(2) Evidence of uniform prices or exchange of past or historical price information alone shall not be sufficient to establish a violation of paragraph (1) of this subsection or Texas Occupations Code §2001.556.
(c) Vertical Price Fixing Prohibited.
(1) Vertical price fixing agreements are prohibited.
(2) Each distributor shall have full discretion in setting the distributor's sales or lease prices for bingo equipment or supplies to authorized organizations.
(3) A manufacturer may not set or control the sales or lease price that a distributor charges a licensed authorized organization for bingo equipment or supplies.
(4) A manufacturer may not set a minimum price on any sales or lease price that a distributor charges a licensed authorized organization for bingo equipment or supplies.
(5) A manufacturer may not prohibit a distributor from offering price discounts, rebates, credits, promotional allowances, or any other arrangement affecting the price paid by the purchaser or lessee of bingo equipment or supplies, to a licensed authorized organization.
(6) A manufacturer may not terminate a distributor's contract for failure to charge the manufacturer's suggested retail price.
(7) Discussions, suggestions, or the exchange of information between a manufacturer and a distributor regarding the sales or lease price charged by a distributor to a licensed authorized organization are not, in and of themselves, violations of this paragraph and of Texas Occupations Code §2001.556, so long as the distributor retains discretion to establish its sales or lease price to licensed authorized organizations.
(8) Nothing in Texas Occupations Code §2001.556 shall prevent a manufacturer and distributor from negotiating or establishing the sales or lease price that the distributor will pay to the manufacturer for bingo equipment or supplies.
(d) It is not a defense to horizontal or vertical price fixing that the fixed or agreed upon price is reasonable.
(e) Recordkeeping Requirements. Manufacturers and distributors shall retain contracts, invoices or other documents sufficient to show wholesale and retail pricing information for a period of three years. This documentation shall be made available to the Commission upon request, in accordance with §2001.216, Texas Occupations Code.
This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 9, 2007.
TRD-200701307
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Earliest possible date of adoption: May 20, 2007
For further information, please call: (512) 344-5113