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Aug 2013
16
August 16, 2013

Minimum Advertised Price Policies: Questions and Answers


What is a MAP Policy?

A MAP policy can be a powerful tool in preventing unwanted and counterproductive discounts from being advertised on the Internet or elsewhere. A MAP (short for Minimum Advertised Price) policy restricts retailers from advertising a supplier’s goods at a price below the supplier’s suggested resale price (or whatever level of discounting is acceptable to the supplier). Anyone who manufactures and distributes products should consider adopting a MAP policy.

Why is a MAP policy important?

A supplier’s image and reputation are significantly influenced by the price consumers are willing to pay for its products. While minimum pricing policies have helped many companies maintain quality reputations for decades, an increased interest in and use of MAP polices correlates with the explosion of online retailing

Online retailers don’t have the overhead costs of a bricks-and-mortar operation, so they can justify slimmer profit margins for each sale. While it is difficult for suppliers to directly control the price at which retailers sell their products without running substantial risk of violating the antitrust laws, a MAP policy gives every supplier control over the advertised price. If retailers can’t undercut one another by advertising rock-bottom prices, a supplier’s concerns about devaluation of its goods are significantly negated.

How can we help?

Warner Norcross & Judd’s Brian Masternak, chair of the Antitrust and Unfair Competition Practice Group, has created a template MAP policy that can be tailored to meet the needs of any manufacturer or supplier. He cautions that a pre-packaged, one-size-fits-all policy won’t adequately address the needs of most manufacturers. In addition, the laws applicable to MAP policies differ from state to state so policies copied from the Internet or purchased online have gotten some suppliers into trouble.

A MAP policy from Warner also will include instructions on implementing the policy, protocols for enforcement, training on how to receive and respond to complaints and suggested penalties for violations of the policy, all of which are critical to legally and effectively implementing a MAP policy.

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