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Unplug office equipment bill

February 3, 1984



It is an appropriate function of government to protect the weak and to aid those in need. But a quietly controversial bill now pending in Congress would protect the strong and help those who, generally, do not require assistance. The proposal offers a ''solution'' that is far worse than the relatively modest problem that may exist.

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The measure purports to protect dealers of office equipment against unscrupulous acts by manufacturers. However, most observers agree that dealers need no such protection beyond existing state laws, inasmuch as the market is extremely competitive, with many manufacturers vying to sell their products through retail dealers.

The congressional bill is the first controversial proposal in years to have united a broad range of electronics and other manufacturers, retailers and consumers - all in opposition. Also opposed are the Federal Trade Commission and the Department of Justice.

If passed into law, the measure would make it extremely difficult - and likely litigious - for manufacturers to switch from one dealer to another. Among other things, they would have to pay compensation for lost ''goodwill'' to dealers from whom they were withdrawing products. And, if those dealers demanded it, they would have to submit to arbitration to determine the size of the compensation. As a result new retailers, in the hotly competitive area of office equipment and computers, would find it extraordinarily challenging to enter the marketplace.

One practical effect of such a law is that manufacturers, rather than risk the possibility of becoming legally entangled with dealers, would instead cut out the middle man and sell directly, to the detriment of small, independent retailers.

It is generally agreed, except by proponents, that the proposal has no parallel in current American business dealings and would provide protection to one segment of the economy which is not afforded to any other. In addition, it constitutes fresh government regulation at a time when government is busily deregulating in many fields.

Undoubtedly some manufacturers, as the proposal's sponsors argue, have treated dealers unfairly by arbitrarily ending contracts and setting unrealistic sales goals. But the dealers already have two effective solutions for these problems: suing under state laws, and switching suppliers. These remain the proper avenues for action.