Marcus, Nordstrom, or Bloomingdale’s. In both instances, the desire to be identified with a channel member gives that firm influence over others. Finally, influence can arise from the legitimate right of one channel member to direct the behavior of other mem- bers. This situation is likely to occur in contractual vertical marketing systems where a franchisor can legitimately direct how a franchisee behaves. Legal Considerations Conflict in marketing channels is typically resolved through negotiation or the exercise of influence by channel members. Sometimes Channel conflict is sometimes visible to consumers. Read the text to learn what type of channel conflict has antagonized this independent Goodyear tire dealer. c A w s c g p M s t w q l r s t t w T h Ch l fli t i ti
CHAPTER 15 Managing Marketing Channels and Supply Chains 399 conflict produces legal action. Therefore, knowledge of legal restrictions affecting channel strategies and practices is important. Some restrictions were described in Chapter 14, namely vertical price fixing and price discrimination. However, other legal considerations are unique to marketing channels. 11 In general, suppliers can select whomever they want as channel intermediaries and may refuse to deal with whomever they choose. However, the Federal Trade Commis- sion and the Justice Department monitor channel practices that restrain competition, create monopolies, or otherwise represent unfair methods of competition under the Sherman Act (1890) and the Clayton Act (1914). Six channel practices have received the most attention (see Figure 15–7 ). Dual distribution , although not illegal, can be viewed as anticompetitive in some situations. The most common situation arises when a manufacturer distributes through its own vertically integrated channel in competition with independent wholesalers and retailers that also sell its products. If the manufacturer’s behavior is viewed as an at- tempt to lessen competition by eliminating wholesalers or retailers, then such action would violate both the Sherman and Clayton Acts. Vertical integration is viewed in a similar light. Although not illegal, this practice is sometimes subject to legal action under the Clayton Act if it has the potential to lessen competition or foster monopoly. The Clayton Act specifically prohibits exclusive dealing and tying arrangements when they lessen competition or create monopolies. Exclusive dealing exists when a supplier requires channel members to sell only its products or restricts distributors from selling directly competitive products. Tying arrangements occur when a supplier requires a distributor purchasing some products to buy others from the supplier. These arrangements often arise in franchising. They are illegal if the tied products could be purchased at fair market values from other suppliers at desired quality standards of the franchiser. Full-line forcing is a special kind of tying arrangement. This practice in- volves a supplier requiring that a channel member carry its full line of products in or- der to sell a specific item in the supplier’s line.
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