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How Do We Know if a MAP Policy Is Enforced?

Posted on 2nd August '23 in MAP Enforcement - Comments

How Do We Know if a MAP Policy Is Enforced?

You can tell that your MAP policy has been enforced when sellers continue to comply with its terms and refrain from violations.

Even if sellers previously violated a MAP policy, a turnaround and compliance show enforcement.

Understanding What a MAP Policy Is

MAP is also known as “minimum advertised price.” A MAP policy outlines to a manufacturer’s sellers the terms of how much their brand or products can be advertised for to keep the market fair for all parties. When authorized retailers abide by the terms of a MAP policy, it attracts consumers who are interested in buying specific products or brands.

When a manufacturer and retailers have a relationship for selling products or entire brands in the market, it establishes how much consumers can expect to have to pay for those items. The MAP policy allows for a competitive market that gives all manufacturers and authorized retailers a fair chance to get products out there and in the hands of customers by advertising products at fair and competitive prices. Compliance with the MAP policy prevents any individual seller to gain an unfair advantage over other retailers so that they can grow and succeed in their business.

How Can You Identify Unauthorized Sellers?

There are various ways to identify unauthorized sellers. Manufacturers can do that by researching online retailers, investigating sales prices and monitoring wholesale price erosion. It’s crucial to be diligent in all of these steps to know which sellers are unauthorized and could potentially violate a MAP policy.

The Importance of Researching Online Retailers

To ensure that sellers are complying with all the terms of your MAP policy, it’s important to periodically research online retailers. Any that are unauthorized have their own set of rules and don’t care about fairness in the market; instead, they unfairly place much lower prices on products and brands as a whole to get an advantage over the competition. These sellers can appear on legitimate websites like Amazon or on gray market sites known for unethical practices. However, whatever the case, researching online retailers can help you determine which ones are unauthorized so that you can weed them out by taking legal action if necessary.

Why You Should Investigate Sales Prices

Manufacturers can investigate the sales prices of the sellers with whom they do business to ensure that they are keeping in compliance with all the terms of their MAP policy. When a seller follows the stated minimum advertised price, it shows that they are adhering to the MAP policy and are fairly marketing the brand or product. However, if any sellers appear to have rogue pricing, the manufacturer can get a better idea of whether they are unauthorized and not open to following a MAP policy. The manufacturer can then take the appropriate steps to stop the retailer from selling their products or even advertising their brand.

Why Monitor Wholesale Price Erosion?

There should be a special emphasis on monitoring wholesale price erosion. Price erosion occurs when sellers place a minimum advertised price that falls below the range of what’s permitted in a manufacturer’s MAP policy. This is done to gain an edge over the competition and makes things difficult for other sellers and consumers alike. When manufacturers do their homework and check on sellers they do business with, they can determine which ones, if any, are guilty of price erosion.

How Can You Establish an Enforcement Plan for Your MAP Policy?

There are certain steps you can take to establish an enforcement plan for your MAP policy. They include creating an enforcement process, establishing minimum prices for retailers and setting up field investigations for retailers.

Understanding How to Create an Enforcement Process

Manufacturers who want to know whether their MAP policy has been enforced need to create an enforcement process that clearly states the policies for minimum advertised prices retailers are allowed to place on their brands or products. This must be done clearly in writing so that retailers understand what’s expected of them. The enforcement process should explain potential consequences for violating the manufacturer’s MAP policy such as an initial warning for a first violation and suspension for multiple violations.

The Importance of Establishing Minimum Prices for Retailers

All manufacturers have the same ultimate goal: to make things fair with the pricing of their brands and products so that the market stays competitive, yet they have a chance to sell through retailers who did business with them. Your MAP policy should clearly state the minimum prices that retailers can use when advertising your products online. Establishing those minimum prices tells sellers that they can only set costs for your brand and products up to a certain cost. The MAP policy can explain what repercussions might await retailers who sway from the minimum prices by which they are bound while working with you.

Creating Field Investigations for Retailers, and Why It’s Necessary

Retailers who the manufacturer believes have strayed from the terms of their MAP policy can be weeded out through field investigations. Conducting these investigations is necessary because it establishes whether a particular seller has violated the minimum advertised price they are allowed to use when advertising a specific product or entire brand. Field investigations can be done periodically and even randomly whenever necessary to ensure that partner retailers are staying in compliance with the minimum price as determined by the manufacturer as per their MAP policy.

When you want to ensure that your MAP policy has been enforced and that sellers are adhering to its terms, utilizing legal counsel and customer service resources are essential. To get the most out of your MAP policy and make it as straightforward as possible for partner sellers and ensure that they’re complying with your minimum advertised price range, there are two things that can help. They include obtaining legal advice on MAP pricing policies and training customer service personnel in MAP policy enforcement.

Attorneys who specialize in the area of antitrust law know the best practices for MAP policies and the pricing you should use as a manufacturer who wants retailers to advertise your products for sale. They can provide you with valuable legal advice on what is most appropriate and in compliance with both state and federal laws. An attorney can help you to understand that when you create your MAP policy, it should refrain from influencing the prices retailers place on products and brands for selling purposes. Instead, remember that you are focusing strictly on the advertising price. This allows you to maintain control of what prices your brand and products can be advertised while sellers can freely choose their sales prices.

Importance of Training Customer Service Personnel in Policy Enforcement

Adequately training your customer service personnel in policy enforcement is crucial to ensuring that your sellers comply with the terms of your MAP policy. It can help manufacturers when they have busy schedules and need to stay on top of the minimum advertised price when their customer service personnel knows what to look for and can determine whether retailers are adhering to the MAP policy or violating it.

How Can You Detect Violations of the MAP Policy?

In order to truly know if your MAP policy has been enforced, you must be able to detect violations of the policy. You can do that by analyzing competitive pricing trends. It’s crucial to know where to start so that you can get to the bottom of whether any sellers who advertise your products or brand have committed any MAP policy violations.

The first step in analyzing competitive pricing trends to detect violations of a MAP policy is to identify the advertising prices of competitor sellers. Those who comply with the terms of a MAP policy should be pretty consistent in terms of the minimum advertised price they place on products at least similar to yours.

Next, you will want to pull the pricing data from competitor manufacturers. You can check on competitor websites, check for information from resellers and even contact representatives and industry contacts or experts.

Check your pricing data, compare and analyze it to determine what a fair minimum advertised price is for similar products or brands in the industry. When you have all of this information, it puts you in a better position to track your partner sellers to see if they are keeping up with these trends or if they are in violation of your MAP policy’s terms.

How to Enforce Your MAP Policy

There are different things you must do to enforce your MAP policy. It starts with your MAP policy itself. Steps to take include considering how to monitor sellers, preparing a MAP violation letter, elevating appeals and replies to an antitrust lawyer, following through with your penalties, cutting ties with problem sellers and closing the back door.

Your MAP Policy is the Starting Point of Enforcement

Your MAP policy should be concise so that sellers understand what’s expected of them and what’s considered unacceptable. It should firmly spell out a range that they are permitted to advertise your products.

Options for Monitoring Sellers

Determining how you’ll monitor sellers is important. Monitoring can be effectively done through the use of software. Trade Vitality offers a straightforward setup and provides you with monitoring on a daily basis so that you can get alerts to violations of your MAP policy. Click here to learn more.

Why Prepare a MAP Violation Letter?

Preparing a MAP violation letter allows you to formally notify sellers that you are serious about enforcing your MAP policy pricing if they fail to comply with its terms. This should be a cease-and-desist letter that tells a violating seller they must reinstate the appropriate price or they will face penalties.

Send Appeals and Replies to an Antitrust Lawyer

If sellers try to appeal your demand about reverting to the agreed-upon MAP pricing or reply negatively about doing so, you can take things a few steps further; send them to an antitrust lawyer to determine your next steps.

Why Follow Through with Penalties?

Sellers who refuse to comply with your MAP policy terms need to face penalties. You should be firm in following through with those consequences to show that you are serious about your brand and products as well as your business, in general. It sends a message to violating sellers and others who could potentially violate your MAP policy in the future.

Cutting Ties with Problem Sellers

If any sellers persist in violating your MAP policy pricing, the next step you should take is to cut ties with them. Although it might be difficult for some manufacturers, this may be the best thing even though it means you might lose a few partner sellers.

Closing the Back Door

Closing the back door is another step to take when enforcing your MAP policy. For example, if unauthorized sellers have tried advertising your brand or products and committed price erosion, refusing them access to your items is best. These sellers often also show off products on the gray market, which does not benefit the manufacturer in any way.

Frequently Asked Questions

What Is the MAP Policy in the U.S.?

In the U.S., a MAP policy allows manufacturers to dictate a minimum advertised price by which retailers are allowed to advertise their products online. A MAP policy is a legal document that explains to sellers the lowest price they are allowed to advertise a product or brand by; the purpose of it is to keep the market fair yet competitive.

MAP pricing is, indeed, legal in the U.S. However, manufacturers are obligated to ensure that the prices they set for advertising their brand and products are fair and comply with state and federal antitrust laws. Enlisting the assistance of an attorney can help.

What Is the Meaning of MAP on Amazon?

On Amazon, MAP still means “minimum advertised price.” Its purpose is to inform distributors and retailers that they must comply with the terms of a MAP policy and cannot advertise products lower than the expressed range of pricing.

How Do You Get Around MAP Pricing?

Retailers can sometimes get around MAP pricing by advertising a product at the appropriate price while including a link for prospective customers to click on to get a better price.

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