Market Relationships: Supplier, Distributor And Competitor Issues

The wheels of commerce turn freely in our society, but they are far from frictionless. Where there are relationships, there will inevitably be disagreements somewhere along the road, a proposition which is no less true of commercial relationships than personal ones.

Many such rough spots can be anticipated and ameliorated by a well-drafted and creative vendor or distributor agreement, documents with which we have extensive experience. Other disputes may be unavoidable, and it is then that business partners or competitors may turn to the antitrust, trade regulation and unfair competition laws for leverage.

Depending on the circumstances, such leverage may be unexpectedly powerful. For example, in places like Wisconsin, Arkansas and Puerto Rico, local dealer protection statutes prohibit a manufacturer from ending a dealer relationship, even an arm's-length, order-by-order relationship with no written agreement at all, unless there is statutorily-defined good cause, and the fact that sales to the dealer are no longer profitable for the manufacturer may not be "good cause."

Another fertile area for discontent is in manufacturer-provided rebates, promotional programs, co-op advertising, and other forms of marketing, sales and promotion support to distributors and retailers. The bone of contention is not usually the value provided, but the pricing restrictions, shelf space requirements or other strings which manufacturers often wish to attach. Federal and state antitrust laws have erected a complex (and not entirely consistent) web of restrictions and requirements around such inducements, including, for example, the Robinson-Patman Act requirement that any promotional services and facilities must be made available to every customer on "proportionately equal terms."

We have years of real-world experience on all sides of these issues, advising manufacturers, distributors, dealers and retailers on avoiding and resolving potentially costly disputes with their trading partners and competitors.

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