TrackStreet Blog

MAP Pricing Violation? What Actions Can You Take?

Posted by Andrew Schydlowsky (TrackStreet) on Nov 29, 2016 10:00:00 AM

Your Minimum Advertised Price Has Just Been Violated. Now What?

So, you’ve gone to the trouble of crafting a Minimum Advertised Price (MAP) or Unilateral Minimum Advertised Price Policy (UMAP) for your product line. You’ve published the written policy on the Partner/Reseller section of your website and in a press release you sent out to the relevant industry trade media. You’ve even built your MAP pricing policy into the standard communication package you send to all retailers, distributors and other resellers. All smart moves. And yet…

When you search for your products on the web, you find a violation of your MAP. Maybe you find several violations. Despite the fact that your policy is easily available for any honorable retailer to find, some Internet resellers are advertising your products at prices well below your MAP. What can you do?

 

HOW TO ADDRESS A VIOLATION OF YOUR MINIMUM ADVERTISED PRICE

  1. Document the violation and issue a written first warning to the offending company

 Your first official step in response to a MAP pricing violation should be to a two-part strategy: Document the offense and send an official warning notice (friendly, but serious) to the violator.

 Documenting the offense will generally involve taking screen shots of the reseller’s website showing the below-policy advertised price. You should also be sure to grab the date and time in your screen shot; this will help you build your case over time if the violation persists even after your official warning letter. 

When you have your screen shots, you will then want to send the violating company a first warning email. This message should include the product(s) being violated, the UPC and SKU for the violated product, time/date of the violation when found, the advertised price violation — and perhaps most important, your MAP price.

In essence, this first warning email should contain everything the violator needs to know to fix things. It doesn’t need to be threatening or overly complicated. In fact, the easier this first letter makes it for your reseller to rectify the problem, the better things will be for you.

For guidance on how to craft your first warning notification, you will want to consult an antitrust attorney and/or work with an expert third-party MAP pricing and UMAP enforcement platform.

If sending your first warning does not deter the violating reseller, you will have several options on your next move. You can craft an escalating series of warning letters and issue those at intervals you choose (say, one new message every day). Or you can simply resend your first warning message regularly until the violator responds or pulls down the offending advertisement.

 If none of these methods work, it’s time to move on to the next step.

 

  1. Stop Supplying the Reseller with Your Product

 You will want to escalate to this next step only after you have made a few attempts to rectify the violation through your warning letters. If those don’t solve the problem, that means the reseller is ignoring your warnings. Which means your next move should be something that your reseller cannot ignore, and that will usually mean cutting off their access to more inventory of your products.

 In many cases this will force the reseller to respond. They might contact you and ask for more supply — in which case you can demand first that they remove all MAP-violation advertised prices and promise not to violate your policy again. You can further let them know that you are working with a MAP enforcement partner who is monitoring their sites and advertisements 24/7, and if they commit another violation they could permanently lose access to your product line.

Or you might find that this cutoff of supply results in your reseller pulling down all MAP-violating pages or ads. In this case, you will likely still want to have the above conversation with the reseller before turning back on the flow of your products. That is, you will want to let them know that any further violations could result in them being terminated from your reseller channel and cut off from all future inventory. You might also want to let them know about your stepped-up enforcement, via your MAP partner, if you choose to deploy such a service.

More often than not, this will be the last step you need to take, because the reseller will want to protect their ability to continue selling your products in the future. 

But in those cases where the reseller ignores all of your escalating warnings, does not respond even after you’ve cut off your supply to them, and continues violating your MAP pricing policy, then it might be time to move on to the next step.

 

  1. Send a “Cease and Desist” letter to the offending company

 Although a MAP policy is not an agreement, meaning resellers do not explicitly or implicitly agree to its terms in any legally binding way when they sell your product, you as the manufacturer or brand still have the law on your side when it comes to preventing MAP violations. 

Often the most effective way to deter an unauthorized reseller is to have your lawyers draft and send a Cease and Desist letter. These letters can have the effect of worrying the offending company that continued violation of your published pricing policy might land them in legal hot water — and some will stop immediately upon receiving such a letter. Let’s admit it: lawyers can be scary.

 

  1. If all else fails, you might be able to take legal action for trademark infringement

 Remember, your MAP policy does not legally obligate a reseller from advertising your products at below your MAP prices. But you might still have legal standing to protect your brand — as well as to protect the authorized resellers who are honoring your MAP. 

One way to do that is to launch a suit based on trademark infringement or related intellectual property law.

Courts have repeatedly held, for example, that trademark holders have the right to protect their brands by controlling the quality of their products’ resale and distribution. 

We can assume that a large, reputable company would not knowingly and continually violate your MAP policy and ignore your escalating warnings that they stop. These companies obviously have too much at stake. So we can further assume that in many cases, these brazen, repeat violators will be small, shady retailers — operators who will likely not be taking any measures to meet the basic quality-control measures the law demands of resellers.

For example, if a reseller is underselling your products and not offering standard benefits typically available with your products — such as a warranty or customer support — then that company might well be committing trademark infringement.

If you have already taken the measures described here — such as issuing cease and desist letters — and those steps haven’t worked, you might want to engage legal counsel and launch a suit based on trademark infringement.

 

PREVENT MAP VIOLATIONS IN THE FIRST PLACE

 Of course, all of these steps for dealing with MAP violations are last-resort measures, measures you will rarely if ever have to take if you deploy the right MAP monitoring and enforcement solution.

 

If you’re interested in deploying a comprehensive monitoring, protection and enforcement of your products being sold virtually everywhere on the Internet, contact TrackStreet now.

Topics: MAP, MAP Best Practices, UMAP, MAP Enforcement