By Alex Jones
Increasingly, manufacturers and brands are implementing a minimum advertised price policy (or a MAP policy) for the resale of their products. In its most basic form, a MAP policy is simple – it is a policy that governs the minimum price at which a reseller may advertise a certain product. However, there is often confusion among brands about the legality of MAP policies, how to implement them and what they should include. If your company is considering implementing one, here are three things to consider:
1. Are MAP Policies Legal? The short answer is yes (this is discussed in greater length in a previous article, “Creating Legal and Enforceable MAP Policies”). Generally, so long as the policy governs the advertised price, as opposed to the actual resale price, then it will not run afoul of antitrust laws. MAP policies should also be unilateral, i.e. they will not be contracts executed by the reseller. Finally, MAP policies should be implemented uniformly; they should apply to all resellers, whether a large distributor or a sole proprietorship.
2. MAP Policies Can Benefit Resellers. There is often a misconception that distributors and resellers will oppose any type of MAP policy, but that is not necessarily the case. In fact, larger distributors will often welcome these policies because they help protect their profit margins. Additionally, MAP policies prevent brand erosion. Steeply discounted products can signal to consumers that a product is cheap or not well made, which can have significant negative impacts for higher-end brands. MAP policies help to maintain consistent prices across the marketplace.
3. Enforcing a MAP Policy. A MAP policy is a unilateral policy; it is not a contract, nor should it be enforced as one (this is to limit exposure to antitrust claims). This is problematic for brands because when resellers violate the policy, companies cannot point to a breach of contract to compel them into compliance. As a best practice, brands should stop doing business with resellers that do not comply with their policy. However, that is not always realistic. Instead, brands can suspend a reseller’s account for a certain period of time for any MAP policy violations or, alternatively, brands can provide advertising dollars to those resellers that comply with the policy.
When used effectively, MAP policies can protect your brand and increase your bottom line. However, there is not a one-size-fits-all policy, so companies should think carefully and strategically when implementing such a policy to ensure it works for their business and their resellers.
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