s_eckelsBy Sam Eckel | Manufacturers selling products today have progressed from an era of “handshake deals” and traditional print advertisements to a world of multi-page contracts, Internet advertising, and social media marketing. To ensure their products are being fairly represented in this global marketplace, manufacturers are turning to Minimum Advertised Pricing (“MAP”) policies to protect their value, brand and beyond.

Retailers, resellers, distributors, etc. all have their own motives when selling a manufacturer’s products, and sometimes those motives do not align with those of the manufacturer. For this reason, it is important that manufacturers take steps to protect their product, their brand and their livelihoods. Implementing a MAP not only protects a product’s value through imposing minimum price restrictions on off-site advertisements of manufacturer’s products, it can also restrict bundled sales, limit resellers to certain markets, restrict sales on certain websites and control advertising on the internet.

Why Implement a MAP Program?

Manufacturers who overlook forming a MAP policy run the risk of their product being misrepresented in the market. For example, Manufacturer X has no reseller program and sells their product to Reseller A and Reseller B. If Reseller A decides to advertise the product for $300, nothing would prevent Reseller B from advertising the same product for $150, thus leading to consumers questioning the quality of the product due to two vastly different advertised prices. This would, ultimately, hurt the value of the product and Manufacturer X’s brand.

MAP programs can help maintain brand image by giving a consistent impression of a product’s value across all sales channels, eliminate competition and underselling between resellers, and provide for enforcement actions on resellers who do not follow the policy. It is important to note in a MAP program that companies can only restrict the advertisement of the products rather than actual sale prices.

Guidelines for Your MAP Program

When disputes arise, MAP policies will often pass a courts’ scrutiny as long as the resellers remain able to sell products at any price. In order to ensure compliance with laws, manufacturers should keep in mind certain guidelines when implementing a MAP program. The most important characteristics of MAP policies are: they must only apply to advertised prices, they must be unilaterally administered and they should cover all forms of off-site advertising.

When implementing a MAP program, manufacturers should do so uniformly so that no one reseller or group of resellers is favored. Manufacturers should also be mindful of where their resellers are located. The United States and Canada share similar views on the legality of MAP policies, but other countries may not.

Adhering to these principals is a good starting point for planning a framework for your company’s MAP policy. However, the world of antitrust law is complex and requires diligent attention to detail and a sophisticated understanding of applicable rules and regulations to properly navigate.

To learn more about drafting a MAP policy for your business, contact Sam Eckel.