Due to the alleged conspiracy, SDS claims to have lost 59 dealers to Wave costing them almost $10 million a year.
While this scheme seems shady as hell to me, I take issue with the way SDS is claiming damages.
Nobody "owns" a customer relationship. They certainly have no claim over three years worth of customer relationships (even assuming they're all going to hold steady over the next three years, which I find unlikely).
Wave does massive volume in the door to door market. I have friends who purchase thousands of panels from them each year and tens of thousands of sensors. I'd be surprised if SDS did the kind of Nortek volume wave did. That being said, Wave probably does get better pricing.
All that being said, Waves prices recently went way up and it's cheaper to purchase from ADI.
I haven’t played a lawyer on television or radio and I’m not pretending to be one or provide a legal interpretation or advice here.
I have attended countless on-line legal trainings over the past 20 years about what is legal and what isn’t by my employers.
I have also signed a few employment agreements in my career.
The FCPA of 1977 rings a bell for bribery and the risk to the business and individual from a corruption standpoint. The penalties can be severe and issued to both the company and the employee. Yes, it’s foreign corruption, but
I can’t remember signing an employment agreement that allowed me to earn money from another source in the same industry. I would imagine selling Amway would have been okay. Of course, I haven’t read or signed a Nortek agreement.
Interesting scene playing out here, where the customer is allegedly bribing the vendor, but not unheard of in the corporate world. It reminds me of a situation in a prior life when I owned an IBM PC dealership in the 80's.
TLDR version: We had a national PC dealership network and they gave out the 'IBM Dealer of the Year' award every year. This one guy kept winning it, until one day he was de-authorized as an IBM dealer. Turned out he had been grey marketing IBM PC's to Latin America by the container load and his local IBM dealer rep had turned a blind eye to it all. Why? because the IBM rep's wife was a real estate agent and the dealer listed his house with her and bought and sold it multiple times generating side gig income for the IBM rep's family.
Part 1: The designation of "authorized IBM dealer" was a gate holder key to being a legitimate player back then. That was akin to being Axis/Milestone Platinum in our industry like maybe 10 years ago. The corporate world was undergoing a seismic shift from dumb terminals to 'intelligent workstations', and if you weren't migrating, you were getting left behind. With PC's costing about $2500 and up, back then, it was nothing to get a request for a quote for 100 of them from a regional bank, govt. dept, or school. That brought out the gray marketeers, wanting to get a piece of the action. The 'grays' as they were, were computer dealers selling IBM's who were not, in fact, authorized IBM dealers. Where did they source their product you ask?
Part 2: We used to have an annual dealer convention of all the PC dealers in our chain. They gave out awards for 'top IBM dealer', 'top Compaq dealer', top HP dealer, etc. This one dealership from New Jersey kept winning the Top IBM dealer, year after year. Then, the next year, we got word he was de-authorized by IBM. Well, it was discovered that this dealership was the source of a lot of the gray marketing. Selling shipping containers of IBM PC's to Latin America and other locations.
Part 3 How did he get away with it for so long you ask? Well, just like the subject article, every mfg. has a rep that monitors his territory's dealerships. They help with sales opportunities, tech support issues, and police compliance. I would hazard a guess that things had gotten cozy enough for an occasional blind eye to be turned in light of the eye popping numbers this dealership was moving. And it gets better: this particular IBM rep had a wife who was a real estate agent. As I was told, the IBM dealer decided to put his house up for sale and listed it with guess who. As the story goes, this house was bought and sold so many times, flip or flop would have been jealous. I think it changed hands between the husband and wife, and left no real paper trail.
The most blatant case of bribery in my experience is when a regional CEO of a large engineering company not only demanded a kickback for a project but also approve prices *much* higher than market average so we could give him more...
On average, most clerks who approve deals of hundreds of thousands of dollars earn not that much and are more than happy to receive a small gift in exchange for choosing the "right" offer among many others.