Tips for Establishing a MAP Pricing Policy
Is now the right time to create a MAP pricing policy for your business? Take a look at our top tips for making the creation process go smoothly.
If you’ve been considering a minimum advertised price (MAP) policy for your manufacturing business’s products, you’re on the right track – especially if your company specializes in big-ticket luxury items that require high levels of service on the part of your sellers. A MAP policy will help you and your specialty retailers continue to provide this necessary service to consumers by keeping prices from dipping below a certain amount.
Start at the Beginning
Find an attorney who specializes in MAP policies and antitrust law. Just as you know your particular industry and products best, so does your antitrust lawyer know the ins and outs of the legal side. Don’t entrust this extremely important issue to your in-house counsel; as good as they may be, they are likely not equipped to deal with the extensiveness of antitrust.
Similarly, working with your antitrust attorney, create your very own policy from scratch. MAP policies are not one-size-fits-all, and it’s imperative that yours is developed specifically around your own industry, your relationship with your sellers, and the particulars of the interactions among all involved. While you can certainly incorporate best practices from other policies, don’t skip ahead and try to adapt an existing MAP policy to your company – copying others’ MAP policies could result in conflicting terminology that could put you at risk for legal trouble.
Work Alone – Not with Retailers
The reason a MAP policy works legally is that it is unilateral – a one-way decision from you, the manufacturer. The policy is issued from the manufacturer only and applies across the board – this differs from a price agreement in which a manufacturer and a retailer agree together on a price. Price agreements can violate state antitrust laws, and you must be careful not to give any appearance of having participated in such an agreement. Do not discuss your policy with your retailers before you issue it; nor should you negotiate terms with anyone who violates it.
Create an Enforcement Plan
A MAP pricing policy is only useful if it’s enforced. Best practice is to plan your monitoring and enforcement strategy at the same time you create your policy. This way, there is no lag time between implementing and following through. Consider an automated MAP monitoring tool, such as ORIS Intel’s PROWL, to make sure you’re on top of any violations from the very beginning. (Click here to learn more about why an automated monitoring tool is your best choice.)
Plan for how you’ll communicate with sellers who violate your policy: how you’ll treat warnings versus when you’ll prohibit the retailer from selling your products, and prepare to stick to your plan – know that you can’t negotiate with any sellers without opening the possibility of others ignoring your policy.
As long as you’re working closely with your attorney throughout each step of the MAP policy creation process, you should be all set to get the most out of your new policy. Learn about some common mistakes manufacturers make when creating their MAP policies, and then get some tips on maintaining your policy now that you’ve created it here.