In both instances the desire to be identified with a

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.
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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.