A Minimum Advertised Price (MAP) or Unilateral Minimum Advertised Price (UMAP) policy is a vital component to your brand’s ability to maintain and grow a healthy and profitable resale channel. Enforcing price consistency and a level playing field for all resellers will play an important role in helping you attract reputable businesses to your product line and keep them devoting energy, online real estate and in-store shelf space to selling your products.
But a MAP policy can also be a tricky document to write. Here’s why.
Although a MAP policy is not a binding legal contract — your resellers do not have to sign any document agreeing to your MAP pricing — you need to put the same level of thought, research and possibly even legal expertise into crafting your MAP policy language that you would with any document that had legal implications. This is because MAP policies must meet certain criteria to avoid stepping over the line into antitrust territory — a mistake that a brand acting in good faith can easily make if they do not understand where that line is.
So here are a few suggestions for crafting a MAP policy using language that is both enforceable and keeps you on the right side of the law.
- Craft your MAP policy using plain language — not legalese.
If you Google “Minimum Advertised Price policy examples” or a similar phrase, you’ll find plenty of real MAP documents published by manufacturers and brands.
You’ll notice that in almost every case, these documents are short (often just a page or two) and that they are written in plain English that any layperson can understand. This is by design.
Your MAP policy will serve several purposes. One purpose, of course, will be to deter disreputable resellers from advertising your products below the prices everyone else in your resale channel is offering them — as well as to provide you with legal standing if choose to take action against a reseller that does violate your policy.
But a second and equally important function of your MAP is to signal to your reputable resellers that you are serious about enforcing your pricing policy — and that you will protect them from being undermined by shady retailers gaming the system. The best way to demonstrate this to your authorized retailers, and to those you’re trying to persuade to sell your products, is to publish a clearly written MAP policy that leaves no room for ambiguity, confusion or legal parsing.
Write your MAP policy as though it were for the average person on the street — not for a lawyer representing your reseller.
- Include a statement acknowledging you recognize that your MAP policy is unilateral and that your resellers are not legally bound by it.
This advice might sound counterintuitive. Why would you want to write language into your MAP policy that lets your resellers know they’re not legally obligated to follow it? Because if you leave enough gray area in your MAP language — such that the policy might be interpreted as attempting to sound like a two-way legal agreement — then you put your company at risk of being attacked for violating antitrust law.
This is where some manufacturers can get caught in the gray area of antitrust law.
The safest way to craft your MAP policy to ensure that it is both enforceable and still on the right side of antitrust law is to explicitly acknowledge that your company recognizes your resellers can do what they want. You should also add, however, that under the terms of your MAP your company is also free to do what it wants to enforce your pricing policy — including taking action against violators.
Nor should you worry that including language like this will encourage MAP violations. Your authorized retailers (and other reputable companies who sell your products) are not avoiding violating your pricing policies only because they think doing so would be illegal. They also understand that a violation could cost them access to your product line and harm their bottom line. At the same time, the shady businesses who would violate your pricing policy will do so regardless of what your MAP states.
- Include a statement acknowledging that your MAP policy refers to advertised prices only — not sales prices.
This is another area where manufacturers can find themselves over the line into violating antitrust statutes.
As you know, a Minimum Advertised Price policy is a unilateral policy that limits only the price at which a reseller may advertise a manufacturer’s product. This has no bearing on the price at which that reseller may ultimately sell the product — and that price might well come down once the customer has engaged with the retailer, such as through in-store negotiations or a discussion over the phone.
But this leaves a lot of gray area, particularly when it comes to online stores. Federal and state courts have at times taken contradictory views about where to draw the line for what counts as publicly advertising a product and what constitutes as a private negotiation or discount offer.
But it is worth noting a case can be made that advertising can be defined more loosely, to include displaying a price on a website or even in an online shopping cart.
Because legal cases have over the years moved the answers to these questions back and forth — and because you want to make sure your MAP policy is legally bulletproof — you should include clear language acknowledging that your policy is meant to limit only how your resellers may advertise your products, not how they sell them.
This way, whatever the specifics of an individual instance of a possible MAP violation, your company will be on solid ground — because your policy clearly states that you are not trying to restrain your retailers in their ability to sell your products.
- Enlist the services of an attorney or firm specializing in pricing policies or antitrust law
If crafting a MAP policy is sounding confusing, then you’re reading this post carefully. It can be difficult for a non-legal expert to know what to include in a MAP policy, what to keep out of it, and why.
Moreover, the rules for what constitutes a sound MAP policy and what might not can differ from state to state and even in the same area over time.
Unless you know, for example, how the Leegin decision might affect the language of your MAP document, or how your unilateral pricing policy would be affected by the Colgate Doctrine, you should probably not draft your MAP document without the help of legal counsel.
As we’ve pointed out in a previous post, antitrust attorneys understand the nuances of pricing policies and how the law affects all of the players in the manufacturer / retailer / dealer / reseller relationship.
Working with an antitrust attorney, then, can help you draft the best MAP policy possible to protect your company, your reputable resellers, and your legal standing in the event that you ever need to use your written policy in a legal action.
Finally, one additional piece of advice on developing your MAP policy. If you partner with a third-party expert’s MAP monitoring and enforcement solution, you can enjoy the benefit of the solution’s existing MAP templates — such as warning letters — all drafted with the input of leading antitrust counsel.
PREVENT MAP VIOLATIONS IN THE FIRST PLACE
If you’re interested in deploying a comprehensive monitoring, protection and enforcement of your products being sold virtually everywhere on the Internet, contact TrackStreet.