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Government Guarantees

3 Jul, 2006 By: Ronelle Ingram imageSource

Government Guarantees

Industry experts continue to write and speak about the no-growth or static
growth economy in the office equipment sector. Yet, it appears that each major
manufacturer’s marketing spokesperson continues to predict that their company
will grow business by five to fifteen percent this year. How can this be? Many
people seem to be misinformed here or overly optimistic.

How is the independent dealer supposed to increase their own market share in
this no-growth climate? If the size of the office equipment market is remaining
static, then how can each manufacturer forecast increased growth in their sector
of the marketplace? How can everyone predict that they will receive a larger
piece of the proverbial no-growth office equipment pie?

The only way I can foresee the possibility to grow your share of the office
equipment and supplies business revenue is to take your new business away from
some other company’s customer base. For the independent dealer, the logical
place to look for growth is from someone else’s disillusioned customers.

What is the easiest way to find disillusioned customers? You may only have to
look at the newest acquisitions that have been made by several of the OEMs, or
other mega-dealers who are buying up the competition. As these larger entities
continue to acquire privately-owned independent dealers, there is a shift in
stability. With each purchase, there is a potential for realignment in the
loyalty of these dealership’s customers and employees. Forward thinking
independent dealers can take advantage of these changes in ownership that make
the newly purchased company more vulnerable than usual. There are several common
tactics that an incumbent dealer uses to try to keep a wavering or former
customer from being enticed by another company. These thinly veiled threats

“You must buy all your products from us or we will
not service your equipment.”

“You can not buy compatible products because it
will void your warranty.”

“We are the only authorized dealer in the area.”

“You can only buy parts from an authorized

“If you do not have a service contract, we will
not service you.”

“Other products are counterfeit and against the
law for you to use.”

“Your servicing agreement, which is paid
through the lease payment, is non-transferable.”

Trying to convince purchasing agents that these are just idle threats is
often difficult. Once a current vendor threatens to disrupt the flow of the
customer’s business, trepidation sets in. Historically, purchasing agents will
side with a current vendor, even at an inflated cost, rather than take a risk at
a similar or lower cost with an unknown vendor.

Turning the Tables on the Competition

In addition to selling your company, there is factual, authoritative
documentation available that can help you educate purchasing agents about their
contractual rights as well as help sway potential customers. This also gives the
purchasing agent documentation to file away or to use for an explanation to an
inquiring supervisor as to why a change in vendor was made.

Providing decision makers with factual material will help solidify their
choice to start or continue buying from your company. Your ability to provide
factual information will also provide them with legal recourse if they are
threatened by other vendors. Here, you will win great creditability and, yes,
their business.

Documentation on federal laws and regulations of the U.S. will enable you to
professionally stand your ground when dealing with other companies that threaten
your potential clients with incorrect information. Free trade and fair
competition are part of the American business cycle. Learn to let the United
States government be your partner in growing your market share.

Trade ‘secrets’

The Clayton Anti-Trust Act was established in order to prohibit actions that may
substantially lessen competition or tend to create a monopoly in any line of
commerce. It prohibits such activities as: price discrimination; selling of the
same  commodity to different buyers at different prices, exclusive
dealings; holding a retailer or wholesaler to a single supplier on the grounds
that no other distributor will receive supplies in a given area, interlocking
directorates; holding by an individual directorships of two or more competing
companies, and companies holding competitors stocks. It also prohibits mergers
and acquisitions where the effect is to lessen competition or to tend toward
monopoly. It gives the U.S. Justice Department and the Federal Trade Commission
authority to block any merger that would violate antitrust laws.

The Clayton Antitrust Act is comprised of SS12, 13,14-19,20,21,22-27 of Title
15. Section 14 deals specifically with the Sale, etc., on agreement not to use
goods of competitors (S3 of the Clayton Act). It states that it shall be
unlawful for any person engaged in commerce, in the course of such commerce, to
lease or make a sale or contract for sale of goods, wares, merchandise,
machinery, supplies, or other commodities, whether patented or unattended, for
use, consumption, or resale within the United States or territory thereof or
District of Columbia or any insular possession or other place under the
jurisdiction of the United States. Or, to fix a price charged therefore, or
discount from, or rebate upon, such price, on the condition, agreement, or
understanding, that the lessee or purchaser thereof shall not use or deal in the
goods, wares, merchandise, machinery, supplies, or other commodities of a
competitor or competitors of the leasor or seller, where the effect of such
lease, sale, or contract for sale or such condition, agreement, or understanding
may be to substantially lessen competition or tend to create a monopoly in any
line of commerce.

The FTC’s antitrust arm, the Bureau of Competition, seeks to prevent business
practices that restrain competition. As

a result, purchasers benefit from lower prices and greater availability of
products and services.

The Bureau carries out this mission by investigating alleged law violations
and, when appropriate, recommends that the Commission take formal enforcement
action. If the Commission does decide to take action, the Bureau will help to
implement that decision through litigation in federal court or before
administrative law judges.

The Bureau also serves as a research and policy resource on competition
issues. It prepares reports and testimonies for Congress, and may present
comments on specific competition issues pending before other agencies. The
Bureau of Competition has developed expertise in a number of industries
important to consumers such as health care, other professional services, food,
and energy.

The antitrust laws are enforced by both the FCC’s Bureau of Competition and
the Antitrust Division of the Department of Justice. In order to prevent
duplication of effort, the two agencies consult before opening any case. The
Commission’s antitrust authority comes primarily from the Federal Trade
Commission Act and the Clayton Act both passed by Congress in 1914.

Make sure your entire selling and servicing staff is familiar with these
documents. Be prepared to e-mail or fax these governmental documents along with
your sales presentation when the competition pressures your customer. Knowledge
is a valuable partner in your quest to increase your market share. Do not allow
your clients to be intimidated by unfair business practices from other companies
that are illegally using threats to limit your company’s access to gain new

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