Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Distributor claims printer manufacturer engaged in discriminatory pricing, (Feb 17, 2016)

By Linda O’Brien, J.D., LL.M.

A manufacturer of office printers has breached its duty to perform its master distributorship agreement in good faith by selling its products directly to the distributor’s dealers and at a lower cost than that offered the distributor, according to a complaint filed in the federal district court in Aberdeen, Mississippi (Impressions Solutions, Inc. v. Oki Data Americas, Inc., February 12, 2016).

Impressions Solutions is a distributor of printing and imaging solutions headquartered in Columbus, Mississippi.

The complaint states that, in September 2013, Impressions Solutions entered into an agreement to be a master distributor for Oki Data Americas, Inc., a manufacturer of office printers and related accessories. At the time the agreement was executed, Oki Data requested that Impressions Solutions provide a five-year forecasting model. Based on the contractual representation that Oki Data would act in good faith, Impressions Solutions invested tremendous time and resources into the Oki Data relationship. This investment included the creation of a service department for repairs of Oki Data products, the training of staff to become knowledgeable about Oki Data products, the recruitment of dealers, the maintenance of in-stock inventory, and the launch of an aggressive sales and marketing campaign.

Since entering into the agreement, Impressions Solutions has performed all of its obligations, became one of Oki Data’s top master distributors, and continuously outperformed its five-year forecasting model provided to Oki Data at the outset of the agreement, the complaint alleges.

According to the complaint, in June 2015, Oki Data notified Impressions Solutions that it would no longer maintain existing pricing margins and subsequently lowered Impressions Solutions’ hardware discount. These reductions in pricing margins caused Impressions Solutions to lose profits and were taken by Oki Data to increase its share of Impressions Solutions’ sales. After Oki Data reduced Impressions Solutions’ pricing margins again in June 2015, Oki Data began an intentional concerted attempt to harm Impressions Solutions.

Specifically, Oki Data began selling its products to Impressions Solutions’ dealers directly and at a lower cost than Impressions Solutions could buy from Oki Data and misrepresented that certain products were out of stock while selling those items directly to Impressions Solutions’ dealers. Such acts resulted in price discrimination by Oki Data, creating different product pricing schemes in sales transactions to Impressions Solutions’ dealers. Furthermore, Oki Data terminated the Master Deal agreement with Impressions Solutions in December 2015 without cause. The termination of the agreement left Impressions Solutions with $700,000 of Oki Data inventory and Oki Data now refuses to use outside distributors to sell its products.

The plaintiff asserts claims for breach of contract, fraud, intentional interference with business relations, and discriminatory pricing in violation of the Robinson-Patman Act. The action seeks compensatory, punitive, and treble damages, interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 1:16-cv-00028-DMB-DAS.

Attorneys: Bert M. Guy and Justin G. Williams (Campbell Guin, LLC) for Impressions Solutions, Inc.

Companies: Impressions Solutions, Inc.; Oki Data Americas, Inc.

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