Essential Guidelines to Avoid Pitfalls When Establishing MAP Price Levels

The hard part of setting a MAP level is who you ask. Working the number out together with your resellers is the version that creates a legal problem. It is also the easy one to fall into, because resellers are the people who actually know what sells at what price.

Set the level yourself, from data you gathered yourself. Keep your written correspondence with the channel pointed at the policy document, and not at the number behind it.

Too high, and your online partners cannot run a promotion

A floor set close to MSRP leaves a compliant ecommerce seller with nothing to advertise. They either stop featuring the part, or they find a way to show the discount that your policy does not name. Both outcomes look like a compliance problem and are actually a pricing one.

Too low, and your counter business carries the overhead

A physical parts counter pays for the building, the stock on the shelf and the person who tells a customer which part they need. Suppose the floor lets an online-only seller still undercut that. Then you are asking the partner who does the expensive work to compete with the partner who does not.

Gather the data without discussing it with the channel

The inputs you need are observable: what competing parts advertise at, and what your own parts advertise at across every seller. Add how those figures move over a season, and what margin the floor leaves at each distributor tier. All of that can be collected by watching the market.

What you should not do is ring round your resellers and agree a number with them. Section 1 of the Sherman Act reaches contracts, combinations and conspiracies in restraint of trade. A jointly settled price level is the shape that gets looked at. We are not your lawyers and this paragraph is not legal advice. Your counsel should see the process as well as the document.

What to put in writing to resellers, and what to leave out

Send the policy. Answer questions about the policy by pointing at the clause.

Avoid written exchanges that negotiate the level, invite a reseller’s view on where it should sit, or discuss what another reseller is doing about it. Those threads read badly later even when the intent was innocent, and they are exactly what a dispute goes looking for.

Write it so it does not read as a contract

A MAP policy is a one-way statement from you to your resellers. No signature block, no countersigning, no wording where the seller agrees to anything. The distinction between a unilateral policy and an agreement is what the United States case law turns on. A manufacturer’s unilateral decision about whom it keeps supplying has been treated differently from an agreement on price. That treatment dates from United States v. Colgate and Co., 250 U.S. 300 (1919). Resale price maintenance has been judged under the rule of reason since Leegin Creative Leather Products v. PSKS, 551 U.S. 877 (2007). Several states are stricter than federal law, so where your sellers are matters.

Revisit the number when something changes

A calendar review that changes nothing is a meeting. Reopen the figure when the MSRP moves, when distributor pricing changes, or when a promotional window ends. Also when compliance on a part refuses to improve after the enforcement sequence has been run against it. That last one is the signal people ignore. A part that nobody will advertise at your floor may have the wrong floor.

Deciding the number is your side of this. The monitoring that tells you what the market is really advertising at, and the enforcement that follows, is what we run.