What is Unilateral Pricing Policy (UPP)?
A Unilateral Price Policy (UPP) differs from a MAP policy in two key ways.
First, unlike MAP agreements, a UPP is always a one-way policy. That’s why it is called unilateral: The policy does not constitute an agreement between the manufacturer and reseller. Both the manufacturer and reseller are independent actors under this policy, both free to do what they want. We’ll discuss this in more detail in the legal section below.
The second way a UPP differs from a MAP policy is that applies to both advertising and resale pricing. With a UPP, the manufacturer sets out — unilaterally, and without any discussion or negotiation with its resale channel — the prices it will allow resellers to advertise and sell its products.
Because the UPP covers everything, the manufacturer doesn’t need to worry as much about specifying exactly what it considers advertising versus resale pricing (e.g., “Click here for best price”). The minimum prices listed in the UPP represent the minimum prices a reseller may list those products anywhere — on its sales pages, in online marketplaces like Amazon, in the cart and out of the cart, in its physical stores, in magazine ads, etc.
Finally, a third distinction from MAP policies is that a UPP may give the manufacturer a broader range of legal options for enforcing consequences. Whereas with MAP the brand is often limited to withholding cooperative ad funds, a UPP can include all manner of consequences for violators — up to and including refusing to supply that reseller with inventory going forward.
To recap, here’s an overview of the important details of a UPP.
A Unilateral Price Policy’s key characteristics:
- It is written as a one-way policy — not an agreement. Both manufacturer and reseller are independent actors. This makes a UPP much safer legally, because by definition it is a one-way statement and therefore far less likely to raise any antitrust red flags.
- It covers both resellers’ advertised prices as well as their actual resale prices. This can eliminate a lot of confusion about where manufacturers will draw the line in terms of what constitutes an advertised price and what constitutes resale price.
- Because it is unilateral, and cannot include agreement or negotiation with resellers, a UPP should not include escalating punishments for the same violator — such as the “3 Strikes and You’re Out” that you might see in a MAP policy. This could be deemed as building an agreement into the statement, which could expose the policy to antitrust risk.
So, which policy should you choose?
Confused? We understand: This stuff can get murky in a hurry. Many businesses ask for a MAP policy when what they need is something else. Some companies simply copy a MAP agreement from the Internet, call it a Unilateral Price Policy, and then publish a pricing statement that is on-its-face a violation of federal antitrust law.
Our brand protection experts can help you sort through these issues and find the optimal reseller pricing policy for your company. But in the meantime, here’s a quick checklist you can run through to gain a better sense of which policy makes sense for you.
- My company offers cooperative advertising funds to our resale partners. (MAP)
- We’ve identified the real problem as an online advertising price war for our products. (MAP)
- We’re uncomfortable putting any pricing policy into agreement form, because we want to absolutely minimize legal risk. (UPP)
- We want the freedom to change our pricing policy as often as we want — and without having to update our agreements with resellers every time we do. (UPP)
- We want to protect our brand from the erosion of both advertised and resale prices. (UPP)
Want to learn more about Minimum Advertised Price (MAP) and Universal Pricing Policy (UPP)? Download our free eBook – how to draft and enforce a successful reseller pricing policy.
For a more detailed discussion of MAP, click here.