Tuesday, April 01, 2008

Update to "Could It Happen Here?"

I should have mentioned in my post a few weeks ago, on the likelihood of stronger enforcement of laws regulating trade promotion in the US, that what clearly can happen is private lawsuits by aggrieved parties. We’ve seen a number of such private actions in recent years, some of them resulting in significant penalties (e.g., LePages/3M, Conwood/US Tobacco).

Now a new suit has been filed by a Kia dealer, alleging that his supplier has been offering larger advertising allowances to other Kia deales in his market. Shocking!
According to the lawsuit, dealership vice president Jim Barnett discovered the advertising program in December 2006 when he "inadvertently" opened a Federal Express envelope that had been misdirected to his dealership.

Inside were letters addressed to some of Barnett's competitors, showing that Kia Motors had been providing them with advertising incentives of $10,000 to $35,000 a month in a "Regional Marketing Fund program."
Just a reminder: If you’re sending out a notice about a special program, make sure you don’t mail it to customers who are excluded from the program.

More seriously, even though the article states flatly (and truthfully) in regard to Robinson-Patman that "the government no longer enforces the law," the possibility of suits by customers or competitors is still very real, and potentially (ask US Tobacco, who got hit for $1 billion) very expensive.

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