Procter Gamble has become so concerned about the proliferation
Procter & Gamble has become so concerned about the proliferation of private-label products that it has taken the extraordinary step of suing one of its own channel members that sells private labels as well as large volumes of P&G products. The firm in question, F&M Distributors Inc., operates over 100 drug stores. P&G claims that F&M’s private-label merchandise is designed and packaged to look almost identical to famous brand P&G products, such as Pantene Pro-V, Head & Shoulders, Secret, Sure and Noxema. P&G not only wants F&M to discontinue the sale of such copycat, private-label products, but seeks damages as well. P&G had initiated similar suits before against private-label imitators, but the targets of those lawsuits had been manufacturers of private-label merchandise rather thandistributors of P&G products. Industry observers think P&G is taking quite a risk in suing its own channel members because they are unlikely to be enthusiastic sellers of P&G products after being sued by P&G. What seems to be going on here in terms of private versus national brand competition and the role of independent distributors? Do you believe P&G is acting wisely in suing one of its own channel members? Explain why or why not.
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