This stuff exists; some people just have to deal with it. Is it "fair?" Well, obviously, not, certainly not in the sense of free markets. But this stuff has been around for a long time. Trust me, here in IL we know all about distributors, beer distribution being one of the most notorious. Bells' pulled out of IL for a couple of years because they refused to agree to their distributor's dictates. They're back now, so I dunno what happened.
To show just how convoluted, inefficient & contrary to good sense this can get, we have a local bar that is very highly rated (
http://www.blindpigco.com/), our favorite place 26 taps, about 150 bottles. So the owner decides to open a brewpub one short block West on the next street. (As a matter of fact, they're having their rollout next Tuesday, after a long dry spell for local beer). The only way he can get his brewpub beer the one block to his original bar (which would take 5 minutes on a dolly) is to turn it over to a local distributor, who, after picking it up at the brewpub, must then deliver it to the bar. This is how things that seem reasonable and have good intentions become crazy.
Another example is our car dealer, which was thriving several years ago as a Chevy - Olds - SAAB dealer. GM then 86'ed Oldsmobile.....but dealer couldn't add another GM line, because they're close enough to Peoria that so many dealer's territories overlap. So- no Pontiac, no Buick, no Cadillac. Pontiac is gone, of course, but now that GM has sold SAAB, it appears that they will have to move that line to another location, making the dealership Chevy-only. While I admit that there are probably a number of dealers who do business selling only Chevrolet, that doesn't alter the fact that the owner is seriously limited in his business decisions by these kinds of agreements. Add another manufacturer's line? Maybe, but if he tried to do that, in the current economic climate, GM might drop him like a hot potato. As it is, the dealership is still going, GM has included them in their current roster, but this is an example of the "dark side" of protected distribution.