Plastic Industry

Posted:  09 Feb 2010 23:22
Recently during a negotiation with a plastic resin supplier, we were advised by a distributor that it was illegal for us to contact the resin manufacturer to discuss price/terms related to recent increases. Is this true? Must we go through distribution on this?

Second item, we are buying direct from a resin manufacturer. The terms are not as favorable as most of our other suppliers/distributors, plus they are selling the same resin to other customers at more favorable terms and pricing. Any advice from a legal standpoint to get a round this?
Posted:  11 Feb 2010 17:18
Are you buying under contract or spot?

First Item: Illegal is a strong word for distributor to make unless it's supported by a contract.

Second Item: Unless you're under contract from resin manufacturer, you should be free to purchase where desired, dictated by market conditions and resin/supplier selection criteria.  If you are under contract and currently price/terms are undesirable to the market you should be looking from a high level view over the life of the contract and take your findings into the next negociation period.


Richard Sweers
Posted:  13 Feb 2010 00:33
Richard is correct. Your contract will dictate what you can and cannot do.  If you do not have a contract, then there is no restriction on you contacting the supplier directly. 

As to your second issue, the issue is not really a legal one (unless you have a contract that controls what you can and cannot do by way of terminating your contract with the manufacturer).  The second issue is one of leverage:  if your terms are not as favorable as those provided by the same company to similarly situated companies, you need to use your leverage (if any) to force better terms.  Ultimately, your only leverage may be to threaten to walk away and they lose the business from you.  But, absent some collusion or pedatory practices among the manufacturer and its other customers, there is no legal mechanism for you to force the manufacturer to provide you with terms similar to what the manufacturer provides others.  I'd be happy to discuss both of these issues further with you via a telephone call, if you like. 

-Alan Rothenbuecher (216) 394-5075

Sponsors