The dangers of MAP agreements

I talked last week about the importance of MAP (minimum advertising policy) agreements. The truth is that they are very important; we at Cobblestone Trade really do not want to work with any companies that do not have (and enforce) MAP.

On the flip side, like most areas of business, MAP is a legal issue full of gray areas and you have to proceed with caution. We are ecommerce experts rather than lawyers but I wanted to give you a few words of warning to keep you out of trouble in this arena.

Perhaps most importantly, it is very important that your MAP policy applies only to advertising rather than sales. Make sure that your policy never even hints at the idea that you are enforcing price controls on sales transactions. In fact, most MAP policies will expressly say that the brand is not trying to control pricing in that way.

There is a very good reason for this; as soon a brand starts trying to enforce pricing controls on sales, it exposes itself to accusations of antitrust violations and price-fixing. This is a problem both on a federal and state level in the US and some countries are even stricter than the US in regards to these issues.

Second, be very careful to avoid allegations of collusion by making your policy unilateral. In other words, don’t talk to your top retailers about MAP before implementing it.

Third, make sure that you enforce map agreements fairly. Do not use it as a weapon against ecommerce sites while allowing violations among your brick and mortar retailers. If you can’t demonstrate that you enforce it consistently, you may find it of little value if you end up in a legal battle.

And lastly, make it simple and easy to understand. We all know that few things in life are improved with more words; that especially goes for documents like this.

Remember that while few of your retailers are likely to create legal drama for you, there are always exceptions. If there is a lot of money at stake, that is especially true. I remember a case a few years ago where a retailer known for discounting sued a brand. Why? Simply because the brand feared that the discounter would not follow MAP agreements and refused to allow them to become a retailer.

There are all kinds of pitfalls out there. Be careful.

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