Legal Briefs #3 - MAP Policy Enforcement Strategies

Transcript:

Ron: Hi and welcome to another episode of Legal Briefs, MAPP Trap Podcast, with Jeremy Richardson and Ron Solomon, where we talk about brand protection strategies for consumer brand manufacturers. And today's topic is “MAP enforcement strategies.“

So, we know what minimum advertised price policies are from some of our other podcasts, but when we talk about the enforcement strategy over the years, standard practice has been that a brand has a three- strike plan. Typically, a three-strike plan is going to be on the 1st incident of a MAP violation there would be a citation. And then when they violate again, there would be a final warning and then, of course, the third infraction would be that the retailer is suspended or terminated from being able to purchase the brand's products.

Jeremy, what do you feel is the best and most effective strategy for a brand to use with their MAP strategy and their enforcement?

Jeremy: Hi Ron, thanks for having me back. Another exciting interesting topic here involving minimum advertised price policies and how do we enforce them.

So, I don't have any strong objection to having a three-strike policy, but I do not like the idea of having that expressly built in to your minimum advertised price policy. I think it becomes too rigid when a brand or manufacturer builds into its minimum advertised price policy how it's going to enforce the policy. I think it gives the company far more flexibility not to have it written in there, and if internally, it wants to have a warning, initial suspension and then cut-off for first, second and third violation, that's fine. But again, I wouldn't build it in so rigidly that there's something in the policy that the company must follow in all situations, because situations are different.

Ron: I guess what you're suggesting is a “don't say it, but do it” strategy. Don't Telegraph what you're going to do to the retailer. But would it be OK, do you suppose for a brand to have a separate enforcement strategy against one class of seller, say Amazon? You're going to give them three warnings, but then a brick and mortar you're only going to give two warnings?

Jeremy: I'm not sure, again, I'm not sure that I'd be so rigid in how I want to set up my enforcement of the minimum advertised price policy. I think companies need to have flexibility because there are violations that are of different levels. If you have a retailer who is just totally violating the policy, advertising well below the minimum advertised price across the board on all of your products, bundling your products with other brands, doing things that really violate the spirit of the minimum advertised price policy, you may say, the 1st time, you're done. We're not selling you anymore, bye-bye.

So, to have this rigid warning letter suspension cut off, 1-2-3 wouldn't fit that situation. Again, I also wouldn't want to have the policy so rigid that you apply one set of standards to one type of retailer and a different set of standards to another type of retailer. You may choose to do that because there may be a legitimate business reason to act differently from one to the other in different situations. But I wouldn't write that out and build it into a written set of procedures that rigidly must be followed.

Ron: Another quick question on this topic is: In another podcast you recommended that a brand not include what their enforcement strategy is in the actual policy itself. So, if they're adopting a three-strike policy that that's just an internal thing. And as you're saying here, that it should be flexible, but that they not telegraph that because maybe it locks them in. But, would they want to include that in this particular e-mail sequence? So, first warning is, this is your first incidence of a MAP violation you have X days to get it together or you will receive a second notice?

Jeremy: I think that would be okay to have an e-mail which says we're putting you on notice and you must fix this within 30 days and if you don't, you're going to be escalated to the next step. But again, that creates some rigidity within the enforcement system. It would be, in my opinion, better to keep this as an internal policy and have the flexibility to send out that first warning, but perhaps to skip a step if the violation is incredibly egregious.

Ron: What if a brand is using an automated system to generate and send out violation notices because they don't have the internal resources to handle these types of exceptions?

Jeremy: Well, I think those automated systems create a lot of efficiency for manufacturers and for brands, so there's definitely a real upside there. It may create a little less flexibility in that, if the first e- mail says you have 30 days to correct this, then you really have to give them 30 days to correct this. And in most cases I think that's completely fine. It's only in the rare case where a violation is super-egregious and so it puts the manufacturer, the brand owner, out of sorts that they want to jump immediately to step three, or maybe to step two. I think that's the rare instance that again, I think an automated system does create a tremendous amount of efficiency for brand owners. It's sort of a set it and let it do its thing.

Ron: OK, and as a final question on this topic, do you recommend warnings, with then a cutoff, versus graduated cut-offs. So, one warning, and then the second time is they lose terms, and then the next time they lose any types of discounts that they may have gotten, and then a third time, they're suspended from the line level, and then the fourth time they're suspended from the entire company.

Jeremy: Again, I think the manufacturer, the brand owner, wants to check with their local attorneys that each of those steps is legal under their jurisdiction. Changing terms or taking away discounts may or may not be appropriate, and may or may not be lawful, so quick caution there. I would not put that in your written MAP policy that you send out to retailers, because again, that locks you into a particular system, a particular enforcement plan. I prefer my clients to have flexibility to let them react to situations appropriately, and that may be different.

Ron: OK. Well, I think that that covers some of the questions we had on MAP enforcement strategies. And Jeremy, as always, thank you very much and you have a great day.

Jeremy: Thanks. Great to be here. Talk to you later.

Ron: If you'd like to submit a question or topic for a Legal Briefs podcast, E-mail them to legalbriefs@mapptrap.com. For more information about how MAPP Trap can help you with your online brand protection needs, visit www.mapptrap.com.