MAP Pricing Violation - What Can You Do About It?

The more popular e-commerce becomes, the more competition appears. There is a need to introduce levers of control to avoid monopoly and unfair markets.

A MAP is one of the ways to control prices for all sellers. The MAP for a product is the minimum advertised price, which is set for all brands of a single segment. This avoids predatory pricing and brand depreciation, and helps maintain healthy competition.

Despite this agreement, the MAP may be violated by some retailers, resellers and business partners. This article will discuss the causes of MAP violations, the consequences, and how to prevent such a situation.

As we already mentioned, a MAP is the minimum advertised price of a product. Business partners, resellers, and retailers agree on the minimum advertised price.

Below this set price, it is impossible to present the goods to the buyer; if this is done, it will be a violation of the MAP. In order to comply with the MAP, manufacturers prescribe a plan according to which the price of the goods will ultimately not violate the minimum price.

The MAP is violated when the manufacturer's plan turns out to be unreliable, or the pricing program gives an erroneous result, or intentionally. Most often, the violation is committed intentionally.

How does it happen? The brand offers all sorts of discounts and coupons for a product that does not initially violate the MAP. After that, the price drops below the MAP.

Let's look at several ways to deal with violations of the minimum advertised price.

One way to detect and eliminate violations of the minimum advertised price is tracking data on the prices of goods. High-quality software for collecting and analyzing information on a large scale can help you with this.

Only the software will be able to identify the discrepancy in time and send you an error report.

When you find a violation of the minimum advertised price from another manufacturer, it is worth informing them about it.

You can write them a letter in which there will be a screenshot of the site with the price, and you can also record the date and time, and provide an error report. Give the seller time to correct the error; if this does not happen, you will have all the evidence to take further action.

It should be borne in mind that the violation could really have been accidental, due to inattention or a mistake. Therefore, the first step should always be a warning: do not jump to conclusions.

But if you have warned the manufacturer and it has not yielded any results, then the next step is to stop the supply of products.

Warnings may go unnoticed, but stopping delivery of goods will definitely be noticed. After all, sooner or later the store will need more products. Usually at this stage the problem is solved, the manufacturers put the right price, and then it’s up to you whether to continue cooperating with them or not.

Even though it seems unbelievable, there are some retailers who won’t budge even after all your warnings. Then is the time for a more severe step. Although resellers don’t explicitly agree on MAP policy terms (meaning that neither side signs any contract), you as a brand will still have an advantage if a MAP violation occurs. In other words, you still have the law on your side.

The last measure is an application to the court. As we already mentioned, the law is on your side. And it doesn't matter whether the sellers signed a MAP agreement or not: you always have a chance to get justice in court.

It is unlikely that you will have to conduct legal proceedings. Since large brands usually do not wish to spoil their reputation, they prefer not to take cases to court. Basically, problems may arise with small retailers who will try to do shady business.

If it comes to penalties, then you should also start small here: large fines will not fix the situation from the very beginning. Start with small penalties and scale them depending on the number of violations.

You can also remove not all products from the stand, but only specific ones for which the price is set below the minimum advertised price.

And again, here we are talking about the initial stages; if the seller does not react in any way, then the punishment should become more serious.

A minimum advertised price policy protects the brand and product from depreciation. By creating a MAP policy, business partners strive to set a fair price for their goods.

Another purpose is to prevent the loss of income due to illegal sellers. Unregistered brands, participants in the gray market, often set prices too low to attract buyers, thereby taking customers and income from official larger brands.

And the third point is to ensure the parity of prices of goods at all locations. The brand's price for the same product at different locations should not differ much. If there is too much difference, it will cause distrust from customers. Therefore, offering discounts and lowering prices below the MAP is not the best idea.

Since the official MAP agreement is a legal agreement, and will be taken seriously by the law, you need to make sure in advance whether you can maintain a certain price level. It should not harm your business.

You must have a clear understanding of your market and your pricing policy. It is better, of course, to conduct a study before signing an agreement on a MAP: it is better to calculate in advance whether this price is suitable for your business, and whether you can properly reclaim the goods so as not to go into negative territory.

If it is difficult for you to conduct such an analysis yourself, you can hire a specialist: you can consult with a general lawyer or an antitrust lawyer.

In short, carefully calculate your strategy regarding certain prices before agreeing to a MAP.

Developing a mutually beneficial MAP policy that should also be beneficial to your business is not an easy task. Especially if you distribute among such market giants as Amazon, Walmart or Target, they undoubtedly have a lot of power, but you always have the opportunity to control your brand.

Remember these solutions as online pricing continues to be a race to the bottom:
- Ask nicely
- Don’t let MAP policies expire
- Increase your MAP flexibility
- Create smaller, scalable punishments

The goal should be to create a scenario where the major retailer has more to lose than to gain by violating the MAP. The MAP must be mutually beneficial, so when it works, it’s working for both sides.

The policy of a minimum advertised price can be a very useful solution, which in the first place will partially prevent the emergence of a monopoly.
But such a solution is quite difficult to develop so that everyone benefits. And before entering into a MAP agreement, you need to think carefully and weigh all the advantages and disadvantages for your company.
You will also need to constantly make sure that prices do not fall below the MAP, as it may happen by accident. To eliminate the possibility of a mistake, you can use Priceva’s Minimum Advertised Price Monitoring.

Violations usually run rampant because Amazon and other retailer sites are competing with each other to offer the lowest price. When products are first introduced on retailer sites, the manufacturers supply minimum advertised price lists if they are selling directly to consumers. Authorized sellers and distributors receive the MAP policy too.

MAP protection is a strategic action aimed at maintaining the minimum advertised price. If one of the market participants violates the MAP, then it is punishable by warnings, and, less often, fines and court statements (if all other methods do not help).

No, you can't advertise products below the set price. This is the whole point of a MAP policy.

MAP compliance is most often an official agreement between business partners, which assumes that no one will reclaim their goods below a certain price. The participants who sign the agreement are responsible under the law.