There is a common and totally understandable misconception about how far a brand’s minimum advertised price (MAP) policy can extend into the sales cycle. The good news is you might have more influence over your resellers’ online pricing than you thought.
Clearly, as the name indicates, a MAP policy allows a manufacturer or brand to set limits on the prices at which the company’s resellers advertise its products. But the question is: what exactly does “advertise” mean in this context?
As far as antitrust law is concerned, there are basically two types of resale prices: the advertised price, and the resale price.
Antitrust regulators and courts have traditionally deemed advertisements (or “offers”) as any communications regarding products or services that can be seen by the public. Pricing that results from private, direct communication with customers, by contrast, tends to be classified as resale pricing.
For example, when a buyer negotiates a better deal with a sales rep in a brick-and-mortar store, that is a resale price. And MAP policies cannot legally set rules for these types of situations because a MAP policy can’t dictate the resale price. A retailer is free to sell a manufacturer’s product for whatever price it chooses.
In fact, if your company is concerned not only with the prices your resellers are advertising your products but also with how much they’re actually selling them for, you might want to consider a minimum resale price (MRP) policy instead of a MAP policy. The MRP can legally cover everything — advertised and resale prices. We have a post discussing these two policies in more detail.
Yes, Your MAP Policy Can Legally Extend to Your Reseller’s Shopping Cart
So, now for the good news. If the MAP policy your company has drafted stops short of enforcing your pricing minimum in your resellers’ online shopping, and that has become a source of trouble for your business, you can update your policy to forbid retailers from using language such as “add to cart for best price.” Doing so is perfectly legal, and here’s why.
When an online shopper places an item into her cart, that shopping-cart page is still a part of the retailer’s publicly accessible online store, and whatever “best price” the retailer will reveal in the cart is simply one click away from that product’s sales page.
Also, shoppers often leave eCommerce websites and online marketplaces with items still in their shopping carts. According to research reported by Baymard Institute, the average shopping-cart abandonment rate in 2017 — across a number of industries such as retail, fashion, and travel — was 77%.
Given that statistic, and the fact that so many online sales pages include language such as “see cart for true price” or “lowest price shown in cart,” clearly many shoppers add items to their carts specifically to check the product’s actual pricing — which means these messages are a form of advertising.
Of course, your MAP policy does not need to restrict your resellers’ ability to offer language about in-cart pricing on their sales pages. But if you want to protect those shopping-cart prices as well, go for it. The law is on your side.
But Your MAP Policy Cannot Legally Dictate Your Reseller’s Checkout Page
A word of caution: While the “add to shopping cart page” can fall within the limits of your MAP policy, your reseller’s online checkout page is widely considered to fall beyond the MAP policy’s limits. The checkout page price is typically considered a resale rather than an advertised price. So don’t include any language in your MAP policy attempting to influence the prices your resellers list at checkout.
If you are worried about these direct reseller communications with customers leading to your products actually selling for prices lower than you’re comfortable with, you might want to draft and enforce an MRP policy instead of MAP.
Keep in mind, though, that there are very real legal risks to including certain types of language in your pricing policy or inadvertently enforcing your policy the wrong way. If you’d like help avoiding these legal pitfalls, you should consider working with a team of brand protection experts. We can show you how it works.
