Legal Constraints

1
Legal Constraints

• Chapter 11 with Duane Weaver

2
Outline

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

3
Market Coverage Policies

• Selective and Exclusive market coverage policies
  termedTERRITORIAL RESTRICTIONS
• Anti-Trust Legal concerns about how the
  restriction of intrabrand competition may
  restrict interbrand competition

4
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

5
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

6
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)

7
SELECTION AND TERMINATION POLICIES

• May refuse to deal with a channel member if
• The decision to delete the member was a
  unilateral decision by the manufacturer
• There are legitimate business reasons for the
  change (conflict of interest, incompetence,
  unqualifiedetc.)
• Laws vary from country to countryimportant to
  have a formal set of evaluation/performance
  criteria that are part of a legal contract.

8
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

9
Thanks