Here’s the scenario:
Company “X” has several divisions (call one Division “A”)-one of which makes systems, and buys parts from Company X.
Company “Y” competes with Divsion A, and wants to buy the same parts. It cannot manufacture its products (which compete with “A”), without these parts.
It attempts to place an order with X, but the order is refused.
Is this legally OK?
If you offer the quoted price, and have good credit, can a firm refuse to sell to you?
This is not an really an answer:
Yes, no, and depends on the circumstances. IANAL so you can get more dope from others. But the only reason I know of to require a company to sell it’s products to anyone in particular would have to do with monopolistic practices. Perhaps regulated industries such as the pharmaceutical concience laws address in some of the GD threads would apply.
Heh, that’s funny. This is the first thread I happened to look at after the “Don’t use initials instead of names because nobody can parse it” thread!
Can it be simplified to “Is it OK to refuse to sell products to your competitor?”
The answer is yes, generally. You can sell to who you like as long as you don’t fall foul of discrimination laws.
Exclusive contract
Why do you think at so many fast food places you get Coke OR Pepsi products?
Not sure if this is a good example but there are car manufacturers who will not sell their company produced maintanance products, like oil filters. You can only get a “genuine” part by going to a dealer or an authorized repair agent and having it installed, not Jiffy Lube.
Under United States law… it depends. If Company X truly is the sole source of the parts in question, and there’s no other legal way for Company Y to obtain those parts, then an argument could be made that the conduct violates the Sherman Act or other aspects of U.S. antitrust law. But it depends on the circumstances.
Also (IANAL, etc.), I think there are different rules in play when you’re talking about reselling the item in question, whether by itself or as a component part, as in the OP’s example.
I may not be able to refuse to sell you something, but I think I can prohibit you from turning around and selling it to somebody else.
I’m pretty sure that it comes down to how you retail your products.
If you sell them wholesale, and then some other outfit retails them, you have very little control over who they’re sold to.
If you sell directly, you can simply choose not to sell to someone, just like you can choose not to buy from someone.
Sounds like the play station thing, processor had the horsepower to theoretically fly a cruise missile. I’d also be worried about selling someone with the credentials mentioned, if they were going to reverse engineer the product.
Declan
Maybe the first time but it can and is done contractually all the time. Wholesalers often dictate terms and conditions to their retailers. Violating those conditions can result in an inter-business fine or cutting off the supply completely to the retailers that are violating the contract. Manufacturers as diverse as electronics manufacturers to toilet paper makers control shelf space in stores and dictate not only supply but also prices and promotions. Large wholesalers aren’t just passive producers that take all orders as they come. Many of the biggest ones try to protect their brand across whole regions and the retailers have more to lose by violating their conditions than vice versa.
It isn’t until the end consumer buys the product that it is open to be sold again under any terms. The general answer to the question is no. I could have my heart set on opening up a store that only sells new Apple computers, Toyota automobiles, and Bose stereos. I could place all the orders I wanted to those companies and I wouldn’t get the product in the first place because they dictate how their products are presented at the retail level.
The term is managerial perogative. The management can choose who they sell their products to and a fair amount more, as the product is a company asset.
Such is literally true even in small business. A business owner can choose to not do business with you and demand you leave the premises. It is only when discrimination begins against a race, sex, religion, etc that it becomes illegal, as RIGHTS of the customer were violated by the manager enforcing their rights. That is in the ninth amendment, where one’s rights may not disparage the rights of another and the equal protection provided by the fourteenth amendment.
I used to work for a lab that bought a bunch of used chemical mixing machines at auction. We attempted to buy the various chemicals used in the machine from the company, but they refused to sell them to us unless we also bought maintenance contracts for the machines. We ended up having to have another company custom make the chemicals for us.
I meant more in the sense of say… Panasonic trying to restrict sales of certain televisions to only lawyers, or something like that. They could very easily restrict sales of certain models to certain wholesalers, and even dictate price/marketing, etc… to the retailer, but AFAIK, can’t say “Don’t sell these to trailer park peple because it’s detrimental to our image to have a 50” Panasonic plasma in a single-wide."
The way they try and do that is via pricing and by manipulating where and when those are sold (trailer park people are unlikely to spend $5000 on a TV that’s only sold in specialized home theater shops), but that’s not the same thing as refusing to sell.
Otis Elevator tried that and did get away with it for years. If you ordered parts for your elevator it could take more than 6 months to get them. But at the same time Otis would say if you had a maintenance contract with Otis our service mechanics have the parts on their trucks and can fix your elevator with no wait. According to the engineering department head of the Department store chain I worked for they were sueing. For years we had to but parts from Adams Elevator Parts company.
Sometime in the 1980’s Otis lost the suit. My understanding of the courts rulling was along the lines that if they sold an elevator to a company they could not force that company to take a service contract to get OEM parts. That Otis would have to sell the parts to the owner of the elevator or the owner’s service company. Otis now has a parts book that they will let customers have.
IN the 90’s I ran into a problem with Sylner (sp) escalator company. They did not want to give me the operation manual to the escalators that were in one of my stores. My maintenance manager called their office in SF. When he asked for the manuals they refused. He reminded them of the lost Otis suit, but he also added if they did not send the manual they could pick up the 4 new esclators in the Valley Fair parking lot and they would not sell another to the company in the western US. I got my manuals the next day.
But they had to sell us the parts and manuals because they sold us the elevators and esclators. That is a different case from OP
On the other side:
In the pre-internet days, I was once a sales manager for a pro audio visual import company. Back then, the profit margin was fairly good so we would occasionally get gray marketers who would import similar product from a dealer in the States and sell the products for less.
One user made a huge purchase ($50k or so) but the gray-market import company couldn’t handle the technical questions, so the user called us. I told them to go back to the company they bought from. They came back and wanted to buy a $600 addition from me, and then get us to service the whole system, and I told them to fuck off.
Part of the reason we were expensive was because we stocked spare parts, had service engineers who knew what they were doing and made manuals in Japanese.
There isn’t anything inherently illegal about that idea. Software companies, including Microsoft, give deeply discounted products to education professionals and students. Wholesale Clubs like Costco and Sam’s Club are even more strange. Even though most people can get a membership if they want one badly enough, it is still retail that is restricted by association with other groups. You can’t just walk into a store and start buying things without an approved membership.
If Panasonic wanted to offer a television model that is only available to people with a state bar association license, that should be fine even it would be a stupid business decision. They couldn’t offer it to only white attorneys however. That is basically how all of these things work. You can restrict access or membership to your business however you want unless you discriminate against a legally defined protected class and there aren’t that many of those. Any of this is generally legal until someone proves that it isn’t in court.