1. Legal Developments in Marketing Channels
Teacher – Shahed Rahman

2. Introduction
Channel relationships always expose each participants to various types of risk – Economic, Psychological or Social
Legal risks are also involved
Firms that want to manage their channel relationships with the highest efficiency must understand the law that apply to their particular marketing activities.
Even making a strategy for the channel you need to know the laws.

3. Theory of Battle Best moment to fire a round
To attempt to escape enemy fire
Destroy the enemies
Where and when to strike
Weakening one sector of their force
Calculate the risk and then make a plan

4. Antitrust laws
Antitrust Laws seek to inhibit or prohibit certain undesirable channel member behaviors
Also attempt to shape channel structure along what the government views as more competitive lines
To introduce sound economic analysis and rationality into the legal decision making process

5. Per Se Rule Versus the Rule of reason
Per se rule – Illegal ( Fixing prices, restricting or pooling output , sharing market on a predetermined basis)
Plainly anti competitive practices
Rule of Reason
Why the practices were implemented and the effect the practices had on competition in and outside of the channel are also considered.

6. Traditional Legal Issues in Channel Relationships
Price Discrimination
Resale Price Maintenance
Vertical Integration and Mergers
Dual Distribution
Tying Arrangements
Refusal to deal and Resale Restrictions

7. Price Discrimination
Involves the sales or purchase of a good or service at a differing price levels when the differing prices are not related to differences in the Sellers's cost
Buying and selling firms can each engage in price discrimination
Recent interpretations suggest the Act functions to equalize buying power so that larger channel members do not receive better deals than smaller channel members
UNFAIR METHOD OF COMPETITION Injury to competition will not be inferred when the price differentials are too small to have any significant effect on sales or market shares
Functional Discount ( Grey Area )

8. Resale Price Maintenance(RPM)
When a manufacturer sets the price at which its product can be sold by independent wholesalers and retailers
Minimum RPM – when the producers set only minimum resale prices, allowing distributors to charge higher prices
Maximum RPM- when producers set only maximum resale prices, allowing resellers to charge lower prices

9. Vertical Integration and Mergers
Vertical Integration occurs when a firm owns and manages organizations at more than one channel level.
It emerges through the forward integration of manufacturers, backward integration of retailers. Or though out the intermediary’s up – or downstream expansion.
More control over channel member behavior and prices and /or economic scale
Integration can also be achieved when one firm acquires the stock or assets of another company operating at a different ( vertical ) or the same horizontal level

10. Dual Distribution
When a manufacturer of a branded good sells that brand – or essentially the same product under a different brand name – to the same market through two or more competing channels
Its not illegal but critics allege that dual distribution negatively affects independent distributors

11. Tying Arrangements
Under a tying contract the purchaser of some good – say, a machine – agrees, as a condition of purchase , to buy the seller’s supplies of some other commodity, such as raw materials processed by the machine.
Eg. – printer and paper
Full line forcing – is a related issue. Known as full line pricing – when dealers must carry suppliers entire line in order to obtain distribution right of a single item.
Exclusive Dealing Arrangements – an intermediary agrees to devote its efforts exclusively toward distributing the product line of a particular manufacturer

12. Resale restrictions
Manufacturers attempts to designate to whom iand in what geographic areas their products may be sold.

13. Emerging Legal Issues in Channel Relationships
Slotting Allowances
Parallel Import Channels
International Business Law

14. Slotting allowances
Shelf space rental fees paid by the manufacturers to retailers.
Cash gifts, payment in kind, such as cases of free goods to secure a space on a shelf, end of aisle display or special merchandising considerations.
Help balance supply and demand of scarce shelf space
Controversies because manufacturers and retailers quibble over how to divide the economic gains resulting from their channel transactions.

15. Parallel Import Channels
Also known as grey market
It was possible for American consumers to buy a new Mercedes Benz in Europe, pay to ship it home, and still save money.
Come into a domestic market through a unauthorized channel.
It creates the rivalry for the authorized distribution channel

16. International Business Law
International Market – 500 Kg Guerilla
Ministry of Commerce
Terms and Condition
International Comity

17. Ethical Channel Management
Aim to compete strongly and to succeed but only within the bounds of sound ethical principles
Sense of Fairness and justice
Goal continue to profitability but only within the bounds of sound ethical principles
Sensitive to legal issue during channel decision making
Corporate codes of ethics