TrackStreet Blog

Minimum Advertised Price Policy Setup? What Should Your First Warning Notice to Violators Say?

Posted by Andrew Schydlowsky (TrackStreet) on Aug 25, 2017 8:17:03 AM

The minimum advertised price policy you craft for your resale channel can be a critical component of your brand’s success. This written policy, which is designed to ensure that all of your resellers advertise your products at or above the minimum price levels you establish, can be invaluable for maintaining strong partnerships with your best retailers, preserving profit margins, and preventing a downward spiral in your products’ pricing that can lead to an erosion in your brand’s perceived value.

Minimum Advertised Price Policy

But your minimum advertised price policy, no matter how well written, can be effective only to the extent that it is supported by an enforcement mechanism to stop violators quickly and deter them from violating your policy again.

And this all starts with your first warning message.

 

5 THINGS TO INCLUDE IN YOUR FIRST WARNING TO BUSINESSES THAT VIOLATE YOUR MINIMUM ADVERTISED PRICE POLICY

 

  1.    A screenshot of the violation

When you include in your warning notice a screenshot of the actual violation of your minimum advertised price policy, you accomplish several important enforcement goals.

First, you put the violating company on notice that you have documented proof they violated your MAP policy. Second, you show the reseller you are serious about protecting your advertised prices and the rest of your sales partners. After all, a warning notice that contains a record of the actual violation sends a signal that your company has developed an organized, intelligent strategy for spotting violations and taking action to correct them.

Of course, this is easier said than done. Because catching every violation, grabbing the relevant screens on the offending company’s site or web ads that prove it, and then sending out a warning message will be time-consuming and difficult to accomplish manually, a best practice will be to deploy an automated platform for minimum advertised price policy enforcement.

 

  1.    A link to the minimum advertised price policy itself

Resellers might violate your company’s MAP policy for all sorts of reasons — some of them completely innocent.

Perhaps the reseller’s marketing or sales rep is new to the company and does not know that your products are regulated by a minimum advertised price policy. Perhaps the person who crafted a new promotion for one of your products simply forgot about your MAP policy, or mistakenly thought your MAP-approved price for that product was lower than it actually was.

With this in mind, it’s always a good idea to include in your warning message an easy path to your MAP policy itself. This could be a link to the URL where your MAP policy is housed — or, if you don’t have it online (which you should), an attachment in the message that contains the MAP policy file.

Your goal with this first warning letter should be twofold: To get the offending company to take down any advertisements of your products at below-MAP prices, and to help that company see and understand your MAP policy so they can follow it in the future.

 

  1.    An appropriate tone based on your existing relationship with the violating company

A violation of your minimum advertised price policy can come from anywhere. The violator might be a reputable retailer with whom you’ve had a positive and profitable relationship for years. It could be a partner brand new to your resale channel. Or it could be a rogue retailer that has no prior relationship with your company.

You should have a first warning message tailored to each of these types of companies (and possibly others).

For a long-standing partner, your first warning might be a gently worded message calling the company’s attention to the violation — along with your screenshot documentation of the violation and a link to your MAP policy.

For a retailer you don’t work with directly — and whom you might not have even known was selling your products — you will want your first warning to be more strongly worded and to focus more on the consequences of either repeated violations or failing to cure the one in question.

And because your company might experience many MAP violations — some from true partners, others from fly-by-night gray-market retailers — figuring out which version of your first warning messages to send to which violators can be difficult and time-consuming. This is another reason it will be strategically advantageous to deploy an automated platform for minimum advertised price policy monitoring and enforcement.

 

  1.    The corrective steps you expect the violator to take, and (depending on the company in question) the consequences for failure to take them

When the violation comes from a reputable sales partner that you have a good working relationship with and who hasn’t committed such a violation in the past, your first warning should give the company guidance as to exactly what corrective action you expect them to take — their “opportunity to cure,” as the lawyers put it.

You might state, for example, that you expect them to pull down any MAP-violating advertisements of your products within three business days.

You could also list the consequences of a “failure to cure” the violations in question, or for future violations, but that probably won’t be necessary for an otherwise upstanding reseller. Plus, those consequences should already be described clearly in your MAP policy itself, which you should also be including in this warning letter.

But when a retailer you don’t have any relationship with violates your minimum advertised price policy — or even a company that’s new to your resale channel and hasn’t yet developed a track record of trust — you might also want to call out the consequences right in your warning message for failure to correct the violation.

Unless the business in question is simply a rogue retailer that is intentionally violating your MAP policy, in most cases a message that communicates your company’s willingness to escalate your enforcement against serial violators should be sufficient to convince the offending company to take corrective action right away.

 

  1.    Input from legal counsel with expertise in MAP policies or antitrust law

Here’s where manufacturers and brands can easily go wrong in crafting their MAP-violation warning letters and other MAP-related documents.

It is vital to understand that a minimum advertised price policy is entirely a one-way statement and not a legally binding agreement. In fact, if a manufacturer and a group of retailers, wholesalers, distributors or other parties were to work together to set across-the-board minimum pricing for that brand’s products, the documents that came out of this work could be deemed violations of antitrust law.

With that in mind, the strategically smart move will be to draft your first warning message — as well as the rest of your series of warnings and your MAP policy itself —with input from lawyers who specialize in either MAP policies or antitrust law.

To cite just one example of where a brand’s innocent attempt at an internally drafted first warning letter can create legal problems, consider that if any of your warning message could be interpreted as creating an agreement with the reseller, that could be push your company over the line into price-fixing territory.

Bottom line: When it’s time to draft your minimum advertised price policy’s warning messages and other documentation, work with legal counsel.

We can help you with the entire process of developing your minimum advertised price policy, setting up templates for warning messages, implementing an automated enforcement system, and gaining Internet-wide visibility into your policy’s violations. Schedule your free demo.

Topics: map policy, Minimum Advertised Price Policy