MAP Policy: Dos and Don'ts When Drafting

By: Andrew Schydlowsky (TrackStreet) November 8, 2018

There are several common triggering events that send manufacturers and brand owners to TrackStreet for help with their online brand protection. Often the company doesn’t know how to stop unauthorized resellers on Amazon from hurting its legitimate retail partners and damaging its brand. But in many other cases, manufacturers come to us because they know it’s time to draft a MAP policy, their team has started researching what’s involved, and now they feel overwhelmed and have no idea where to begin.

MAP Policy

 

If that sounds like your team, this post can help. Drafting a MAP or other type of reseller pricing policy doesn’t need to be complicated, but there are plenty of missteps that could harm your business if you don’t know the basics. So we’ll walk you through some of the fundamental steps you’ll need to take - and avoid - when drafting your company’s MAP policy.

 

Do: Identify the right reseller pricing policy for your company.

 

Often one of the first steps we at TrackStreet take when working with a new manufacturer or brand owner is to dig into their specific needs to figure out which type of pricing policy is best suited to them. Contrary to a common misconception, it’s not always a Minimum Advertised Price (MAP) policy. In fact, many companies come to us because they’re frustrated by the limitations of MAP, and they simply don’t realize there are other reseller pricing policies that would be a better fit for them.

As the name suggests, MAP allows a manufacturer to establish the minimum prices that it will allow its retail partners to advertise its products (“the offering price,” as the lawyers put it). But this policy gives a manufacturer no influence over the actual selling price. If a retailer communicates directly, one-on-one, with a customer and agrees to sell your products for well below your MAP-approved level, that company will be perfectly within the guidelines of your MAP policy.

If your company is equally concerned with how much your resale partners are selling your products for - not just their advertised prices - then you might want to opt for a different type of policy, such as a Minimum Resale Price (MRP) policy.

 

Download our Free eBook, written by Gene Zelek, Senior Counsel at
Taft Stettinius & Hollister LLP:
How to Create the Right Reseller Pricing Policy for Your Company.

 

You can also learn about the various types of reseller policies (covering pricing and other aspects of your business relationships) in our post on how all of these reseller policies differ?

 

Don’t: Draft your unilateral policy with language that suggests it’s an agreement.

 

One thing you always need to remember when dealing with reseller policies is that these policies fall under the regulatory authority of federal and state antitrust laws. If you strike a deal to allow one retailer to sell your products at prices below those you allow of your other sellers, for example, antitrust regulators and courts might deem this illegal price fixing or restraint of trade.

One of these easiest ways to protect your company against antitrust challenges is to draft your reseller policy as a unilateral statement, rather than as an agreement. The courts have looked favorably at such policies - where a manufacturer simply states what it wants resellers to do (such as not advertising its products below a certain price), explains the possible consequences of failing to abide by those desired behaviors, and then leaves the decision to comply or not to each reseller.

Generally speaking, as long as there is no agreement in these policies (either explicit or implicit), regulators will find them perfectly legal. But that means you need to be careful not to include any verbiage - if you, dear reseller, do this, we promise to do that - that could even be interpreted as a two-way agreement.

 

Do: Use plain language.

 

One common mistake brands make when drafting their reseller policy is to assume the document needs to be loaded with formal legal jargon to ensure it reads like an ironclad and legally binding statement. Nothing could be farther from the truth.

First of all, your reseller pricing policy is not a legal document. It is simply your company’s statement (a one-way statement, if you’re drafting it correctly) describing the behaviors you wish to see from your authorized retail partners. The goal here is to communicate your policy clearly so that it can be easily followed –not to trick your resellers or to overwhelm them with legalese.

Second, loading your reseller policy with jargon will only confuse your retail partners and turn them off. After getting a look at the pages and pages of your policy’s “hereinafter” and “therewith,” they might not even read it. (Be honest: Have you ever read all the way through one of those Privacy Policy statements?) And if they don’t read it, there is a higher likelihood that they won’t follow it.

One more thing to consider here. Drafting your reseller policy so that it’s clear doesn’t mean simply avoiding legalese. It also means being precise and direct about what your policy calls for and the consequences for failing to adhere to those demands. For example, brands run into problems when they use vague terms such as “may” - as in, “a violation of this clause may result in a 30-day suspension from further inventory.” May? Will it or won’t it?

Believe it or not, even small words or phrases like these can increase a manufacturer’s risk of antitrust legal exposure. If your policy uses less-than-definitive language (such as “may”) to describe consequences for violations, this leaves room for interpretation among your staff for each violator. If your organization chooses to enforce some aspect of your pricing policy against one retailer for a violation, but later opts to let another retailer off the hook with just a warning for the same violation, regulators could deem this favoritism and a breach of antitrust law.

Bottom line: You want your retailers to read and easily understand your MAP policy or other type of reseller pricing policy. The document should be no more than a page or two, written in plain English. And it should be applied in a uniform fashion across all of your resellers.

 

Get Hands-On Help Drafting Your MAP Policy

 

To recap, putting a reseller pricing policy doesn’t need to be overly complicated: Make sure you choose the right policy for your company. (It might not be MAP!) Draft it as a one-way statement, not an agreement, to minimize the risk of antitrust issues. Write your policy as a straightforward, one- or two-page document. And be very clear and precise about what you demand from resellers, and what consequences they’ll face if they don’t comply.

But if you’d like more guidance, we have three final suggestions:

  1. Download our free books:
    1. How to Draft and Enforce a Successful Reseller Pricing Policy
    2. How to Create the Right Reseller Pricing Policy for Your Company
  2. If you’d like more hands-on guidance from a team of brand protection experts, contact TrackStreet for help.

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