MAP Policy Part Four: Think of Your MAP Policy as Good Athleisure.
We were going to compare a good MAP policy to a tailored suit, but we thought athleisure would be more appropriate. 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) blog post, we cover some substantive components of the MAP policy and how you may consider addressing those components for your company.
- Violations & Enforcement. Great consideration should be given as to how to structure the enforcement section of a MAP policy, and companies that use two-step distribution (company → distributor → reseller → end user) have additional considerations. How will the company provide a MAP 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 MAP 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? There are strategies for effective MAP policy enforcement even if you utilize two-step distribution or a distribution model with more steps.
- I’d Rather Be on Holiday. So would your resellers. If there are certain times of the year that you want your products to be on promotion (such as Black Friday or Fourth of July), consider whether you want to specify those promotions in your MAP policy 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.
- No Globe Trotting. If you have downstream channel partners in countries outside of the United States reselling your products, you want to be careful that you are not expressly (or inadvertently) applying your U.S. MAP policy to those other channel partners until you have consulted with an experienced attorney. Competition (antitrust) laws vary from country to country, and in some countries, use of a MAP policy is flat-out illegal.
- Enforcement on a SKU Basis. Rather than enforce a MAP 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, 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 MAP 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.
- Subscribe and Saves and Other Promotions. If your company’s products are ones that are subject to subscribe and saves, spend some time reviewing the promotions used in your industry, including the initial brand purchase discounts and subsequent discounts for routine orders. This will help you determine what advertising practices the MAP policy should address and, if applicable, what maximum percentages off the MAP 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.