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To: Recon Dad

The Colgate Doctrine has to be implemented on a company-wide basis and must be adhered to strictly. The problem in implementing it is that it must be absolute: in your example, it must be “sell it for $20 or else you are terminated.” If you have a distributor selling for less than $20 and it isn’t terminated, the company can, in fact, run into serious price fixing problems. Lots of companies find it is easier to not bother with it than risk a rogue sales agent going along with a price-cutting distributor, exposing the company to significant antitrust risk.

Incidentally, the Colgate Doctrine may now be a thing of the past with the Supreme Court’s decision a few years ago that makes resale price maintenance subject to the rule of reason. If you’re interested, google “Leegin Creative Leather Products.”

And avoiding jail is always a good thing. :)


14 posted on 02/03/2010 5:27:40 AM PST by Publius Valerius
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To: Publius Valerius
“sell it for $20 or else you are terminated.”

In the paper industry getting rid of a customers was not easy. I honestly never saw a customer terminated for not selling a product at a particular price. I know P&G controlled their away from home customers, but they just restricted who could sell it better than most.

The paper industry was one of the justice departments favorite targets.

15 posted on 02/03/2010 6:09:09 AM PST by Recon Dad ( USMC SSgt Patrick O - 3rd Afghanistan Deployment - Day 106)
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