Is this an illegal monopoly

[FUMINGMAD]

What is the name of your state? IL
Are companies allowed to produce, distribute and sell their own products under the same company name? And are they also allowed to prevent other companies from selling their products below the suggested retail price?

 

[CheeseBlotto]

What is the name of your state? IL
Are companies allowed to produce, distribute and sell their own products under the same company name? And are they also allowed to prevent other companies from selling their products below the suggested retail price?

1st question: Yes, of course. Why wouldn't they be?
2nd question: Not enough information to answer, be much more specific.

 

[seniorjudge]

What is the name of your state? IL
Are companies allowed to produce, distribute and sell their own products under the same company name? And are they also allowed to prevent other companies from selling their products below the suggested retail price?

Q: Are companies allowed to produce, distribute and sell their own products under the same company name? And are they also allowed to prevent other companies from selling their products below the suggested retail price?

A: Yes and yes. It's called capitalism. It's great.

 

[FUMINGMAD]

Isn't that a monopoly?

I thought that they had to set up a different system for retailing their product if they were they manufacturers and distributors of that same product.

By controlling all aspects of production, distribution and marketing couldn't they inflate the product to the point where it didn't reflect the true market value?

Isn't that what anti-trust laws are supposed to prevent? Didn't Microsoft get into trouble for something like this? And then ended up having to pay fines?

Are companies allowed to say that you can not discount their products for sale online?

 

[seniorjudge]

I thought that they had to set up a different system for retailing their product if they were they manufacturers and distributors of that same product.

By controlling all aspects of production, distribution and marketing couldn't they inflate the product to the point where it didn't reflect the true market value?

Isn't that what anti-trust laws are supposed to prevent? Didn't Microsoft get into trouble for something like this? And then ended up having to pay fines?

Are companies allowed to say that you can not discount their products for sale online?

Do you have facts or details underlying a legal question?

 

[CheeseBlotto]

I thought that they had to set up a different system for retailing their product if they were they manufacturers and distributors of that same product.?

Why don't you simply say who "they" are. It would make it much easier to help you.

By controlling all aspects of production, distribution and marketing couldn't they inflate the product to the point where it didn't reflect the true market value??

Only if there is no competition for the product. This is an extremely rare situation.

Are companies allowed to say that you can not discount their products for sale online?

Of course. In some cases a high price is part of the appeal of the product and part of the company's strategy. You don't beieve a Rolex cost 100 times more to produce than a Timex, do you?

 

[seniorjudge]

Isn't that what anti-trust laws are supposed to prevent? Didn't Microsoft get into trouble for something like this? And then ended up having to pay fines?

Microsoft was allegedly trying to squash competition. From the very little I can glean from your posts, this company is the only one making whatever it is.

If I am the only person making widgets in the country, I can charge what I want without fear from the government.

If you and I are both making widgets and I do something nasty to you, then I could get in trouble.

 

[divgradcurl]

I thought that they had to set up a different system for retailing their product if they were they manufacturers and distributors of that same product.

As other's have noted, your thinking is incorrect. Manufacturers often WILL set up a different system for retailing their own products, but they do that to avoid competing with and offending their current customers (the distributors), not because they have a legal obligation to do so.

By controlling all aspects of production, distribution and marketing couldn't they inflate the product to the point where it didn't reflect the true market value?

A manufacturer may charge whatever they want for a product -- if they charge a price too high, the market will stop purchasing the product. What the manufacturer cannot generally do is dictate minimum prices that the distributors must sell at. The manufacturer can suggest retail prices, and can raise the price to the distributor, or stop selling to the distributor, if they don't sell at retail price. The manufacturer can stop selling to a distributor if they don't like their distribution methods. Basically the only thing a manufacturer cannot tell it's distributors "you must sell the things I manufacture for $X."

There are fewer controls over "vertical price fixing," which is the manufacturer -> distributor -> retailer chain, that there are over "horizontal price fixing," which is all of the retailers colluding to raise prices.

Isn't that what anti-trust laws are supposed to prevent? Didn't Microsoft get into trouble for something like this? And then ended up having to pay fines?

No, the Microsoft case is completely different. MS did not get into trouble for horizontal or vertical price fixing -- they got into trouble for using their market power ot maintain their monopoly. Monopolys, contrary to popular belief, are not in and of themselves illegal -- what is illegal is using anticompetitive means to botain a monopoly, or using "market power" to maintain a monopoly. MS got in trouble because it used its monopoly powers to keep competitors from entering the browser market. It's the anticompetitive use of monopoly power that is illegal, not gaining or having monopoly power in the first place.

Are companies allowed to say that you can not discount their products for sale online?

Sure. Companies can say you can't discount on line, you can't advetise prices online, you can't sell online, whatver -- as long as they don't demand that you sell at a minimum price, they are in the clear. Companies can do all sorts of things that make it so that effectively you do have to sell at a minimum price, but that's legal -- really the only illegal activity in a vertical supply chain is somebody requiring a minimum price.

 

[FUMINGMAD]

The company produces a type of product for the skin.

IL

But are you saying that they cannot tell you not to sell the product at a discount.

...really the only illegal activity in a vertical supply chain is somebody requiring a minimum price.

 

[divgradcurl]

IL

But are you saying that they cannot tell you not to sell the product at a discount.

A manufacturer cannot say "you must sell this product for at least $X" without potentially running afoul of antitrust laws. Chances are, a manufacturer who says you can't sell at a discount from a suggested retail price would also potentially run afoul of antitrust laws.

But a manufacturer is completely free to stop dealing with someone who doesn't sell at a minimum price (such as a suggested retail price), or to charge more for items when selling to a distributor who sells at a discount, so this prohibition on "saying" you can't sell a product at a discount is a pretty hollow "right."

 

[dallas702]

This situation relates back to the US v.Firestone case back in the early 1970s. The practice of total control of the vertical distribution chain was challenged and those arrangements wer supposed to be illegal after that. Buuuuuut.....it seems to have survived as a practice, bolstered by lots of corporate lawyers and bigger companies who just drove their complainers into the ground with endless legal filings. In reality....who knows after 30+ years of changes and challenges to the Firestone case.

If it's really important to your business you need to find an attorney who specializes in this area. For a few hundred dollars (or maybe some research yourself if you have lots of time) you will know whether to pursue it any further. Just keep in mind that even if you are legally correct it can be massively expensive to bring a case like this to a conclusion that actually helps you. Of course, if you have a strong case, and know of others who have had similar experience with the same company, you could try to get Uncle Sugar involved. Either way I couldn't imagine a resolution in less than 5 years.