Sherman & Clayton AntiTrust

Original Equipment Manufacturer (OEM) Equipment Contracts-vs-Supplies

The next time your equipment suppliers’ (Cash Register, Computer, POS etc) representative says something like…

“Sorry, I’ll have to void the warranty on your equipment because you’re not using our (O.E.M.’s) brand of media (paper or paper roll product) and imaging (ink roller’s, ribbon cartridges and spools, laser and ink jet cartridges, etc)…”

DO THIS

Inform your equipment suppliers’ representative that it is illegal to require or force the owner of a piece of equipment to purchase and/or use ONLY the O.E.M.’s branded media and imaging supplies. To make this requirement is in direct violation of the Sherman and Clayton Antitrust Acts.

A classic example of the issue was brought before the U.S. Supreme Court in 1936 in IBM-vs-United States. At that time IBM leased data processing machines to customers with the requirement that they only use the tabulating cards manufactured by IBM. Their customers were threatened with termination of their lease if they used cards produced by other manufacturers. As decided by the U.S. Supreme Court, this requirement in IBM’s lease agreement was held to constitute a “tying agreement” and was found to be in violation of the antitrust laws.

Don’t be intimidated by sales or service personnel. Let them know that they cannot legally require, in writing or verbally, that you or your company as lessee's or owner’s of said equipment exclusively purchase supplies from them. In order to make this kind of requirement, they must conclusively demonstrate and prove that other brands of supplies are incompatible with their equipment.

Show this information to anyone who insists on voiding a warranty agreement, lease/purchase contract or attempts to charge you for a service call because they found that you weren’t using their (O.E.M.’s) branded media and imaging supplies. Protect YOUR Right to use the supply vendor of your choice.

What Exactly IS this act?

The ShermanAntitrust Act is a USA Federal law prohibiting any contract, trust, or conspiracy in restraint of interstate or foreign trade.

The Sherman Act also provides that no person shall monopolize, attempt to monopolize or conspire with another to monopolize interstate or foreign trade or commerce. A felony, an individual violating these laws may be jailed for up to three years and fined up to $350,000 per violation. Corporations may be fined up to $10 million per violation.

• Section 1 of the Sherman Act outlaws "every contract, combination . . . , or conspiracy, in restraint of trade," but long ago, the Supreme Court decided that the Sherman Act prohibits only those contracts or agreements that restrain trade unreasonably. What kinds of agreements are unreasonable is up to the courts.

• Section 2 of the Sherman Act makes it unlawful for a company to "monopolize, or attempt to monopolize," trade or commerce. As that law has been interpreted, it is not necessarily illegal for a company to have a monopoly or to try to achieve a monopoly position. The law is violated only if the company tries to maintain or acquire a monopoly position through unreasonable methods. For the courts, a key factor in determining what is unreasonable is whether the practice has a legitimate business justification.

• Section 5 of the Federal Trade Commission Act outlaws "unfair methods of competition" but does not define unfair. The Supreme Court has ruled that violations of the Sherman Act also are violations of Section 5, but Section 5 covers some practices that are beyond the scope of the Sherman Act. It is the FTC’s job to enforce Section 5.

The text above is public domain material authored by an agency of the US Government. To locate the original material go to the FTC site.