[dropcap]W[/dropcap]e’ve all heard about the e-commerce businessman who struggled to implement a minimum advertising price (MAP) policy but couldn’t because he was too busy running his business. The discounter price slashers seemed to be winning and things were deteriorating. His sales plummeted, retailers complained about their shrinking profits and his brand equity shrunk. No customer wanted to identify with his ‘discount brand’.
Things began to look up after he got a MAP monitoring software that showed him where his products were being sold and at what price. This helped reduce MAP violations, his retailers complained less and he saved time and money.
Every entrepreneur wants to maximise business profits like this man. But don’t forget that a poorly-formulated MAP policy can backfire. When setting up your minimum advertised price (MAP) policy, ensure that you avoid the following five common traps that often whip up legal risks for you.
1. Adopting A Custom-Made MAP Policy
Studies have shown that every MAP monitoring process can be tedious. It is even worse when the policy isn’t suited for your business. Reliable MAP monitoring companies are renowned for handling tedious operations like looking for major online markets, cataloguing evidence of MAP violations, and even establishing communication links with your retailers. But most of all, they can help you determine whether or not a MAP policy is a good fit for your business.
Most decisions will be made based on your relationship with sellers, your brand, retailers- customer relationships and so on. Each MAP policy must be designed while considering the aforementioned factors.
You devalue your business when you copy and paste another company’s MAP policy. This can put at risk of contravening antitrust laws and can cost you your business in the end.
2. Refusing To Cooperate With AntiTrust Counsel
Smart business owners understand the consequences of refusing antitrust counsel. A MAP policy can constitute an illegal restraint of trade under the law. When you consider the disastrous penalties for contravening antitrust laws, you’ll agree that it is better to seek legal advice.
A good lawyer will not only tell you if a MAP policy is good for your business, he/she will give you valuable business advice that will help you avoid heavy court fines and charges.
3. Accepting Rate Agreements From Consumers
When your retailers append their signatures on a MAP policy, an agreement has been reached. According to the law, an agreement doesn’t necessarily need a written contract; even price negotiations are considered agreements even before a signature appended on the dotted lines.
If you must create a MAP policy, ensure that the agreement clearly states your decision on the prices. This will reduce future problems that may arise. Business owners can rest easily knowing that certain lawsuits and demoralising complaints have been nipped in the bud.
4. Conflicting Policy Enforcement Problems
After you have formulated and established your MAP policy, you must brainstorm on the following issues: what penalties will be meted out to defaulting retailers? Are your retailers likely to obey the policy? Which of your retailers can’t you afford to let go of? Do you want to consider an advertised price when enforcing your policy?
Enforce your policy impartially or your business will bear the brunt of your inconsistent policy enforcements. Make sure your policy clearly defines your stance or you’ll waste time and money in the future. Disgruntled retailers might take you to court for several reasons. Make sure your MAP policy serves the purpose for which it was created.
A MAP monitoring software will make it easier for you to ensure consistency. Not only will this web-based service monitor the prices at which your products are sold online, it will help you protect your business relationships with retailers.
5. Making Deals With Non-compliant Sellers
One you have a well-formulated MAP policy; you must make up your mind to sever business ties with uncooperative retailers. Engaging in numerous negotiations with the noncompliant seller can send the wrong signals to the court. The last thing you want is for those negotiations to be considered as an agreement.
Other retailers are bound to appear at the re-negotiation table if they realize that your policy isn’t definite. They’ll all pick and choose what aspects of the policy to abide by and which to ignore. This will create a lot of confusion and force you to go to court.
Curtail the level of communication you’ll have with retailers. And limit it. Often, the amount of back-and-forth will be determined on a case-by-case basis with allusion to court decisions. Considering how tricky these situations can be, it is advisable to conduct a detailed enquiry. If in doubt, consult an antitrust lawyer familiar with your business.
Chioma Iwunze-Ibiam writes creative non-fiction and prose fiction. Her works have appeared in Romance Meets Life, Flash Fiction Press, MTLS, Saraba Magazine, Sentinel Magazine and others. Her first novel, Finding Love Again, was published by Ankara Press. She owns and manages Creative Writing News.
