Answer to Question 1
Dual distribution occurs when a manufacturer sells to independent retailers and also through its own retail outlets. While this concept can foster competition, it can also lead to increased levels of channel conflict. In such a system, the manufacturer manages a corporately owned vertical marketing system that competes with independent retailers, which it also supplies through a conventional, administered, or contractual marketing channel. However, independent retailers tend to become upset about dual distribution when the two supply chains compete at the retail level in the same geographic area. Though retailers argue that dual distribution is an unfair method of competition and is a violation of the Sherman Act,, the court views dual distribution as actually fostering competition. Any independent retailer wanting to sue a manufacturer for dual distribution will have to convince the court that it was competed against unfairly and damaged. The retailer has to show that the manufacturer-controlled outlets were favored or subsidized to an extent that was detrimental to the independent retailer.
Answer to Question 2
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