We were going to compare a good MAP policy to a tailored suit, but we thought "doctrine" would be the better choice. That's because your MAP policy should be something you can live in day in and day out. The key to making that happen is tailoring it for your company’s goals and needs. During our fourth, and final, edition, we'll cover substantive components of the MAP policy and how you may consider addressing those components for your company.
Great consideration should be given as to how to structure the enforcement section of a MAP policy, and companies that use two-step distribution have additional considerations.
Two-Step Distribution: Company → Distributor → Reseller → End User
How will the company provide a policy violation notice to an indirect reseller buying through distribution? Can the company obtain the violator’s contact information through the company’s MAP monitoring service? If a stop-ship is an enforcement action under the policy, how will the company actually put an indirect reseller on a stop-ship so that the indirect reseller is not buying from your distributors or from you?
You must know that there are strategies for effective policy enforcement, even if you utilize a two-step distribution or a distribution model with more steps.
Honestly, so would your resellers. If there are certain times of the year that you want your products to be on promotion, like Black Friday or the Fourth of July, consider whether you want to specify those promotions in your MAP policy. The goal is to avoid MAP holiday announcements throughout the year.
Alternatively, if you have resellers who routinely run certain promotions each year, the company can consider allowing its resellers to select their own MAP holiday per the policy’s terms. However, this can result in off-MAP advertised prices by at least one reseller throughout the calendar year, triggering various algorithms and potentially undermining the purpose of the MAP policy.
If you have downstream international channel partners reselling your products, caution is necessary. You must not expressly, or inadvertently, apply your US MAP policy to those other channel partners until you have consulted with an experienced attorney. Competition laws, or anti-trust laws, vary from country to country, and in some countries, use of a MAP policy is flat-out illegal.
Rather than enforce a policy against a reseller for all of the company’s products, some companies want to enforce only with respect to a violating SKU. In deciding whether this approach is workable for your company, there are many factors to consider. Such as, including whether you use two-step distribution and whether your distributors have the ability to block access to its reseller customers on a SKU by SKU basis. You will also want to think about whether the company has the time and resources to properly devote to policy administration, as SKU by SKU enforcement greatly increases the time to track and increases the complexity of the day-to-day MAP policy administration.
If your company’s products are subject to subscribe and saves, spend time reviewing the promotions used in your industry. That includes the initial brand purchase discounts and subsequent discounts for routine orders. Doing this will help you determine what advertising practices the policy should address and, if applicable, what maximum percentages off the policy should specify for such promotions.
There are several similar promotional exceptions you may wish to make that an experienced attorney can help you review, as well. That's why it's always advised to have legal council for dealing with these concerns.
Want to chat about Minimum Advertised Pricing? Reach out to attorney Jessica Cunning at [email protected] to schedule a virtual session. Jessica is a strategy leader in our nationally recognized Vorys eControl practice, helping companies draft, implement, and execute workable MAP policies.
Want to learn more? Consider reading Vorys eControl’s white paper “The Winning Strategy for MAP Success and Long-Term Brand Value in the eCommerce Market.”
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