Questionable Business Practice

garbarrage

I wonder could anyone offer some legal advice regarding my wife's hair salon?

She recently set up a salon in our house, and already has a loyal client sheet of customers that have been with her for years. When she gets a cashflow going and is a little more established, she will be looking at a premises etc.

My question is in relation to the business practices of her product supplier. She has worked with the same supplier in various salons for the last 9 years and knows the products well. So naturally, when she set up on her own she contacted them with a view to using their products. She met with the area Rep and was informed that their company treat all salons the same regardless of size, and that she would have access to trade price on all products, including salon exclusive products and POS, training etc.

She placed an order for €260 of stock (which is actually quite a lot for a weekly stocking of a small salon established or not). And a further order of €200. A week later she received a text informing her that she would not be allowed to place orders for one of the salon exclusive products.

She then placed another order of restocking.... and a week later upon trying to place another order, was told that she would no longer be able to purchase their premium products, and instead was offered their budget line instead. As every salon in a 20 mile radius stocks the premium product, this is extremely detrimental to a fledgling business.

Our suspicion is, that the owner of a salon that my wife worked for 3 years ago, who is a big customer of this company, put some pressure on the area sales rep. After a (somewhat snipey) comment in a conversation with him in the local a week or so ago.

My question is, can companies single out small businesses like this? It seems like there must be some precedent here. Surely if they sell to every other small salon in the area, and having told my wife that their policy is indiscriminate of size that they MUST make good on that policy, despite pressure from larger customers..

Any advice would be greatly appreciated..

Ken.

Does she order direct from the rep? Can she go above his head. I don't think there's anything that says a company has to sell to anyone for any price unless its discrimination on one of the nine grounds(race,religion,sex,etc.)

garbarrage

ken wrote: »

Does she order direct from the rep? Can she go above his head. I don't think there's anything that says a company has to sell to anyone for any price unless its discrimination on one of the nine grounds(race,religion,sex,etc.)

She buys from the rep... We are going above her head, but before I do that I'd like to know where we stand legally.

Seems we have no legal grounds, so.

What are the nine grounds? Although, I don't really want to go down that road. Just interested.

Fingers crossed the national rep is a little fairer.

Ken.

http://www.citizensinformation.ie/en/employment/equality_in_work/equality_authority.html
Under the equality legislation discrimination based on any one of 9 distinct grounds is unlawful. These grounds are:

Gender
Civil status
Family status
Sexual orientation
Religion
Age (does not apply to a person under 16)
Disability
Race
Membership of the Traveller community.

garbarrage

ken wrote: »

http://www.citizensinformation.ie/en/employment/equality_in_work/equality_authority.html
Under the equality legislation discrimination based on any one of 9 distinct grounds is unlawful. These grounds are:

Gender
Civil status
Family status
Sexual orientation
Religion
Age (does not apply to a person under 16)
Disability
Race
Membership of the Traveller community.

Thanks for the info.

I don't suppose it matters that she was explicitly told that she would have access to these products and prices before opening an account with them?

Peregrinus

If her suspicions are correct - i.e. that the supplier is refusing to supply her at the request of a competitor of hers - then this is an anticompetitive practice. I think we're looking at competition law rather than the equal status legislation.

It might be worth her while making a complaint to the Competition Authority, though to be honest she might need a bit more evidence first. Does she know other small operators who are supplied with the products that are denied to her?

doublej

Just to put the alternative into the mix;
Your wife is attempting to use contacts obtained while in the employ of her (now) competitor, is not prepared to open on a High Street paying business rates, etc.
Your home is used for both business and domestic purposes yet it is unlikely that you have notified the Local Authority who continue to provide water at a domestic rate; it is a requirement for businesses such as hairdressers to pay a commercial connection fee to allow effluent be discharged into the sewers.
Your insurers are entitled to be made aware of the change of use of your home to correctly rate the increased risk.
Your wife seeks parity with a business yet is not prepared to level the playing pitch herself.
Were she to be a Bona Fide competitor in the same defined market and the supplier was acting in the fashion alleged then there MAY be anti competitive elements in the refusal to supply but at the moment she is enjoying significant benefits from her status as a non compliant "business".

garbarrage

doublej wrote: »

Just to put the alternative into the mix;
Your wife is attempting to use contacts obtained while in the employ of her (now) competitor, is not prepared to open on a High Street paying business rates, etc.
Your home is used for both business and domestic purposes yet it is unlikely that you have notified the Local Authority who continue to provide water at a domestic rate; it is a requirement for businesses such as hairdressers to pay a commercial connection fee to allow effluent be discharged into the sewers.
Your insurers are entitled to be made aware of the change of use of your home to correctly rate the increased risk.
Your wife seeks parity with a business yet is not prepared to level the playing pitch herself.
Were she to be a Bona Fide competitor in the same defined market and the supplier was acting in the fashion alleged then there MAY be anti competitive elements in the refusal to supply but at the moment she is enjoying significant benefits from her status as a non compliant "business".

Firstly, my wife brought her client list to that employer. She has worked in another salon for 3 years since working for this person.

Secondly, my wife seeks the treatment she was promised when she approached this supplier. There are no relevant tax or rate issues to this particular problem. She is not seeking "parity". I'm sure her previous employer has access to price breaks due to a larger volume of product purchased. Also, we know that he has access to other benefits such as courses etc from this company.

We were told (In our "premises") that all salons, including ours, were treated the same by this company, before investing in an initial stocking of products.

The only difference is size and premises. She is registered and tax compliant, and hopes to be in a premises by the end of the year.

She doesn't have anything like the volume of customers that her previous employer has, (who I might add, started exactly the same way as my wife), do you think she should pay the same rates despite not producing even 5% of the waste this guy does.

Thanks for your input all the same..

rovoagho

Surely there's more than one vendor in the marketplace? So switch vendors, screw them.

garbarrage

rovoagho wrote: »

Surely there's more than one vendor in the marketplace? So switch vendors, screw them.

This was my thought initially also. However, that means an initial restocking again, which is costly. It's not going to break us, but it's a pain we could have done without. Also, it means trial and research that now have to be done while we are trading that could have been done in the weeks prior to opening.

I'm convinced that there are better products on the market, but my wife has been using these products for the last 9 years. She could source them all (colours, treatments, shampoos etc) in the one place. They are pretty much in every salon in a 50 mile radius, and seem to carry a reputation.

Again, it's more an issue of fairness. Being led to believe that our business was welcome, before handing over money, and subsequently mistreated like this.

This isn't going to break us. It simply means that we have a slightly harder time keeping ourselves stocked. Ultimately, I think we will have a better product, albeit without the local reputation that this product has.

I'm prepared to take it on the chin, and we still have the rep's superior to deal with (although, I'm not hopeful there... Im sure the reps work on commission, so I doubt the superior will support the possibility of losing a bigger client). Just testing the water before contacting her boss.

Thanks for all the input.

Wheelnut

Doublej has made very valid points about people who use private houses to compete with commercial businesses without paying rates, water charges, effluent charges etc.

However, back to the real problem: if she can not get the products locally why not try e-bay or Amazon? If the postage is a problem look at the services of Parcel Motel. You may end up getting everything cheaper. A family member got a box of rare deodorant aerosols from Italy for reasonable money via e-bay.

garbarrage

Wheelnut wrote: »

Doublej has made very valid points about people who use private houses to compete with commercial businesses without paying rates, water charges, effluent charges etc.

However, back to the real problem: if she can not get the products locally why not try e-bay or Amazon? If the postage is a problem look at the services of Parcel Motel. You may end up getting everything cheaper. A family member got a box of rare deodorant aerosols from Italy for reasonable money via e-bay.

DoubleJ posted an irrelevant point. While it may have been valid in another thread, his points don't form the basis of an argument, therefore cannot be valid. I'm not asking about rates, insurance, or anything else. My question was very specific. DoubleJ made an inference and then ran with it. I am not responsible for his assumptions. Nor did I ask him to make any. But I'd wager you'd have a hard time finding any business person, anywhere who was fully bona fide from their first day.

The issue at hand is simply that we were misled into a business relationship by a shady sales rep.

Buying through EBay isn't practical. These are professional products and require after sales and constant accessibility to stock. We have sent an email to her superior asking for a refund on all used stock, and contacted several other reps who are all happy to deal with us.... Provided of course that we show them our water rate, and commercial ESB bill ;-) /sarcasm

Pat Mustard

garbarrage wrote: »

My question is, can companies single out small businesses like this? It seems like there must be some precedent here. Surely if they sell to every other small salon in the area, and having told my wife that their policy is indiscriminate of size that they MUST make good on that policy, despite pressure from larger customers..

Any advice would be greatly appreciated..

My knowledge on this subject is very limited, but I wonder if it is something which the Competition Authority could/would investigate?

1. Section 4(1) prohibits and renders void "all agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or in any part of the State". The Act lists some specific types of behaviour which are expressly prohibited. These include agreements which:

• fix prices
• limit or control production or markets
• share markets or sources of supply
• apply dissimilar conditions to equivalent transactions with other trading parties or
• attach supplementary obligations to a commercial contract which have nothing to do with the subject of the contract (e.g. tying).

EDIT: I now see that I have been beaten to the punch by Peregrinus!

doublej

If the OP is looking for advice on whether the practice is more than merely unfair, it is most likely not Sect 4 but Sect 5 that may provide a remedy.
sect 5 relates to the abuse of a dominant position,included in which is a refusal to supply or a refusal to apply equivalent terms for items.
The bar is very high;you need to be able to prove that the company has a dominance in the market;from what the OP has stated,this seems to be the case(dominance is ordinarily 40%) , but can be lower. the company can have varied Terms and conditions such as deposits,credit terms etc,but must have a valid reason( failure of a prospective customer to meet credit criteria etc) to refuse to sell their product, unless it is an Agency.
The competition authority view their mission to bring competition to the consumer,i.e., the end user; the OP needs to be able to show that their customers are having to pay more for their treatments due to the high cost of product, the fact that the business is paying more is not considered to be relevant in its own right,it is the EFFECT of the suppliers action that is relevant.