MAP or minimum advertised price policies are great tools for manufacturers. For one, they enable you to safeguard your brand’s reputation and the ideal price your products should be sold, all the while encouraging honest and compliant resellers to continue working with you since they won’t have to worry about competing with noncompliant and untrustworthy retailers. But the truth is that your MAP policy could only do so much, and some manufacturers have fallen into the trap of committing these dangerous and expensive mistakes.
A One-Fits-All MAP Policy
Anyone could easily download a one-fits-all MAP policy of the Internet. However, each business and brand is unique, which means that for a MAP policy to be effective, it must consider the business’ industry, resellers, as well as the strength and reputation of the brand, among others. Opting for a cookie-cutter MAP pricing policy could expose your business to costly antitrust lawsuits. That said, before finalizing your MAP policy; work with an antitrust lawyer to make certain that yours would be foolproof, entirely legal, and customized to fit your business goals.
Inconsistent or Non-consistent MAP Enforcement
Before enacting your policy, you must think about how you would punish resellers that violate it. But the threat of punishment would be worthless if you don’t enforce your MAP policy consistently. This would enable some of your resellers to get away with violations, which would, in turn, be unfair to your honest resellers who follow the rules just to find out that violators are undercutting them. You could likewise be exposed to antitrust lawsuits because when you take action against a violator following complaints from your compliant resellers, a court could consider this agreement in restraint of trade.
Negotiating with Resellers
The Federal Trade Commission or FTC states that MAP policies are completely legal provided that manufacturers impose them unilaterally. Some states even prohibit vertical price agreements, meaning that you enact a MAP pricing policy; you should never negotiate with your resellers. However, negotiations with violators are worse, since even if you could come up with an agreement with a violator, if your other resellers get wind of this, they would most likely attempt to bargain with you as well.
Although these mistakes are hazardous and costly, they’re likewise avoidable. As long as you create your MAP policy with help from an antitrust lawyer, consistently enforce it, without negotiating with violators, it would protect your business and reputation instead of jeopardizing it.