Time for a quick review of the ways that antitrust law should affect your Minimum Advertised Price (MAP) policy.
You might have read all of these concepts and best practices before—maybe even in some of TrackStreet’s previous posts about MAP policies and price fixing. But understanding how the various antitrust laws can play into your pricing policy is so important that we thought it would be worth revisiting here.
Below is a very short quiz to see how much you know or remember about the antitrust implications of drafting and enforcing MAP.
Then we’ll review a few basic tips for developing and maintaining a policy that keeps your company on the right side of the law.
Test Your MAP Policy Antitrust Knowledge
We’ve listed the answers below. No peeking.
1. True or false:
Manufacturers and their retail partners may work together to establish only the minimum allowed advertised price—but they cannot legally discuss the actual sales price.
2. When resellers contact your company with questions or requests about your MAP policy, the best practice is to:
a) Allow anyone in the company to handle these, as long as they’ve received training on your company’s MAP rules and processes
b) Direct all of these calls to your company’s legal counsel
c) Direct all of these calls to your company’s designated MAP Policy Administrator
d) None of the above
3. True or false:
As long as your company drafts your MAP policy as a unilateral statement of your guidelines—and not as a two-way agreement—you’ll never have to worry about violating antitrust law.
A Few Antitrust Tips for Your MAP Policy
Our first tip is to avoid drafting a MAP policy, or developing processes to enforce it, without expert help. There are many ways even an innocent mistake can place a brand in legal jeopardy.
But even as you’re conferring with antitrust legal counsel or brand protection experts to develop your MAP policy, you should always keep best practices like these in mind:
Make it unilateral
For your MAP policy to have the best chance of standing up to an antitrust challenge, it should be drafted as a one-way statement of your company’s pricing guidelines. It should not be structured as an agreement that your resellers must sign.
Focus only on advertised prices
As the “a” in the acronym indicates, a MAP policy addresses only the advertised prices your company sets for resellers. To stay on the right side of the law, your policy should not try to influence your retail partners’ actual selling prices. In fact, your MAP policy should explicitly state that your resellers are free to sell your products for any prices they choose.
Keep the language plain and clear
The more complicated your policy’s language and the more you pack it with legal jargon, the less helpful the policy will be in your defense if you ever face antitrust challenges. MAP policies should be short (just a page or two) and written in plain English. This protects all parties—especially you.
Assign a policy administrator
The more people in your company you allow to answer reseller’s questions or requests about your MAP policy, the higher the risk of a legal misstep. MAP policy management and enforcement needs to be centrally managed by someone who understands both the policy itself and the law. Don’t diffuse responsibility for managing your MAP—designate an official MAP Policy Administrator and send all inquiries to that person.
(Manufacturers and retailers should not work together in the development of any aspect of a MAP policy. Regulators could view this as price fixing, restraint of trade, or a violation of other aspects of antitrust law.)
(A manufacturer can speak with its resellers about the company’s MAP policy details, but the company needs to make sure that the people having those discussions understand where the antitrust legal lines are. Even innocently making an exception for one reseller could later be deemed an antitrust violation. This is why the company should assign one person as its MAP Policy Administrator, and direct all MAP inquiries to that person.)
(In the eyes of antitrust law, even a MAP policy drafted within the law can in effect be turned into an “agreement” at any time—for example if the brand makes a pricing exception for one retail partner but not for others. If this happens, the manufacturer could face an increased risk of antitrust legal exposure. Drafting a policy that meets legal requirements is only the beginning of keeping the company on the right side of antitrust law.)