Selling products ethically

Being ‘forced’ to buy a product repeatedly is not necessarily unethical but it rather depends on the circumstances. Here are some examples:

1 A pharmaceutical company makes a breakthrough and develops a drug which cures a particular disease – and this is the only such drug. The patient has to keep buying new supplies to stay well. Generally, pharmaceutical companies can price this as they wish until the patent runs out and this is recognised as a way to provide incentives to undertake the very expensive new drug development process. However, there have been cases where a second company buys up the patent then charges x10 the price. This is usually regarded as, unethical an abuse of the market and has led to serious legal action.

2 A company makes a piece of equipment that required consumables or spare parts and the items have to be bought from the original company. Eg ink jet cartridges each for specific printers or a glass screen will fit a particular phone. Companies have been known to insert identification processes into their equipment which identify is a ‘copycat’ product is being installed instead of the ‘genuine’ article. Most customers do not support that as the price of the spares and consumables is kept artificially high. Similarly car companies insisted that, to maintain warranties on cars, services had to be carried out only by authorised dealerships. Under EU Block Exemption legislation a manufacturer cannot force a buyer to have their car serviced by their official dealership network, and cannot refuse to honour a new car warranty simply because a car has been serviced elsewhere. However, a manufacturer does have the right to set a servicing schedule which must be adhered to.

Therefore, this type of follow-up tie-in is regarded as an abuse of the market mechanism, is unethical, and often illegal.