Hines Cosmetic Co. sold beauty preparations nationally to beauty shops at a stan

Question

Hines Cosmetic Co. sold beauty preparations nationally to beauty shops at a standard or fixed- price schedule. Some of the shops were also supplied with a free demonstrator and free advertising materials. The shops that were not supplied with them claimed that giving the free services and materials constituted unlawful price discrimination. Hines replied that there was no price discrimination because it charged everyone the same. What it was giving free was merely a promotional campaign that was not intended to discriminate against those who were not given anything free. Was Hines guilty of unlawful price discrimination? Explain.

Explanation / Answer

I would not say that Hines were guilty of unlawful price discrimination at all, since they provided the free demonstration and advertising materials based on a promotional campaign and it was given as per choice by the company. The company owns the right to distribute materials based on their choice of shops, depending on the qualification criteria, whichever shop fulfils that or even without any criteria, based on their assessment to choose the shops they would want to sell off the items.

What the organization can be called guilty off is the price discrimination of the products it was selling, as the products were priced at same rates and there was no discrimination at all and there was no unethical funding on the price of the products. About the free materials, as there was no cost involved and there was no revenue generation out of the same, also it was offered as the promotional gift from the company side, so this definitely cannot be called as unlawful practice. Company reserves the right to select and pass these free demonstration and free advertising materials to whichever shops they chose or decide to be supplied with.

The shops that were not supplied with them can request to the company to also provide them with the same, in case the company finds it fine to equip them as well, like other shops, but they cannot claim it as an unlawful practice against the Hines cosmetic company.

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.