Legal Constraints Chapter 11 with Duane Weaver

Legal Constraints Chapter 11 with Duane Weaver

Outline • • • Market Coverage Policies Customer Coverage Policies Pricing Policies Product Line Policies Selection and Termination Policies Ownership Policies

Market Coverage Policies • Selective and Exclusive market coverage policies termed: TERRITORIAL RESTRICTIONS • Anti-Trust Legal concerns about how the restriction of intrabrand competition may restrict interbrand competition

CUSTOMER COVERAGE POLICIES • Controlling to whom you may or may not resell to. • E. G. : House Accounts (direct sell) • Prevention of Grey Markets (unauthorized resellers (perhaps unqualified)) • Different accounts to different resellers to minimize consumer confusion and reduce intrabrand competition

PRICING POLICIES • Price Maintenance – RPM: controlling lowest or highest sale price • Price Discrimination – Commodities (not services) – Of like grade and quality (generic private vs. brand) – Substantially lessens competition (difficult to prove, yet critical to complainant winning) • Defensible arguments: – Cost justification – Meeting Competition – Availability

PRODUCT LINE POLICIES • Exclusive Dealing – do not compete with sellers products • Tying – must include buy with a tied in product • Full-Line Forcing – must buy entire line to carry any one item • Designated Product Policies – exclusive distribution agreements by specific products (e. g. : high-end products)

SELECTION AND TERMINATION POLICIES • May refuse to deal with a channel member if: 1. The decision to delete the member was a unilateral decision by the manufacturer 2. There are legitimate business reasons for the change (conflict of interest, incompetence, unqualified…etc. ) • Laws vary from country to country…important to have a formal set of evaluation/performance criteria that are part of a legal contract.

Ownership Policies • Impacts of Vertical Integration – e. g. : forward by producer or backward by retailer • Integration by Merger – regulators look to make sure this does not limit competition and may disallow the enactment. • Integration by Internal Expansion – only limited by monopoly laws. • Dual Distribution

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