We have all seen companies like Gucci, Tiffany, Apple and Bose merrily selling their goods free of any taint of discounting\u2014and wondered how it is that they are able to do that. After all, from the viewpoint of most consumers, sales and discounts are a way of life, especially in tougher economic times. How can these popular brands go on, year after year, always selling at \u201clist\u201d or \u201cmanufacturer\u2019s suggested retail\u201d prices with nary a sale in sight? Somehow, it just ain\u2019t the American Way!<\/p>\n
There\u2019s a serious antitrust issue here too: resale price maintenance has until recently been a per se violation of the Sherman Act\u2014i.e., harm to competition and consumers is presumed, so proof of any agreement between a manufacturers and its resellers to put a floor on resale prices is presumptively anticompetitive. \u201cVertical\u201d price fixing was, for 100 years, no less illegal than price fixing among competitors. The Supreme Court\u2019s 2007 decision in Leegin changed all that. In a sea-changing decision, the Court held that RPM should now be analyzed under the \u201crule of reason,\u201d just as geographic, customer and other \u2018vertical\u2019 restrictions on resellers have been for 30 years.<\/p>\n
The trouble is, under the antitrust laws of most states and most other countries, RPM remains a \u201cper se\u201d or \u201chard core\u201d violation. It may be years (if ever), before state and foreign laws come around to the Supreme Court\u2019s new way of thinking about RPM.<\/p>\n
Which bring us to MAP (minimum advertized price) programs. Monsanto, Whirlpool, and hundreds of other companies have used MAP policies for decades to influence, if not control, pricing by their resellers. MAP programs are based upon every company\u2019s right not to deal with others, if the decision is unilateral, rather than part of an agreement, collusion or conspiracy. Bose is permitted unilaterally to announce MAP pricing, coupled with a published policy that it will, e.g., withhold marketing funds, refuse to accept orders, or terminate any reseller that advertizes or sells below its MAP prices. As long as no agreement, express or tacit, is involved, the MAP program does not violate section 1 of the Sherman Act.<\/p>\n
Technology companies, with a few exceptions such as Apple, have not traditionally resorted to MAP programs. Competition is just too fierce, product life cycles too short, the channels are too fragmented, or perhaps suppliers simply have other, simpler ways of lessening internecine price competition among their resellers.<\/p>\n
That is starting to change, big time; and I\u2019m wondering why. Over the last two years, more and more of my tech clients have started asking about MAP programs. Several have actually implemented them after careful review and preparation. These are not, by the way, Fortune 50 companies with mature channels of distribution and brands that are household names.<\/p>\n
Later, I\u2019ll describe some of the challenges and practical lessons learned as we\u2019ve set up MAP programs for small or SMB tech companies. For now, however, I\u2019m trying to understand why so many tech companies are suddenly interested in MAP. Is it the publicity surrounding the Court\u2019s Leegin decision? The crummy economy? The maturation of distribution channels or product lines?<\/p>\n
Comments and ideas welcomed.<\/p>\n","protected":false},"excerpt":{"rendered":"
We have all seen companies like Gucci, Tiffany, Apple and Bose merrily selling their goods free of any taint of discounting\u2014and wondered how it is that they are able to do that. After all, from the viewpoint of most consumers, sales and discounts are a way of life, especially in tougher economic times. How can these popular brands go on,…read more →<\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/comptonantitrust.com\/index.php?rest_route=\/wp\/v2\/posts\/23"}],"collection":[{"href":"https:\/\/comptonantitrust.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/comptonantitrust.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/comptonantitrust.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/comptonantitrust.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=23"}],"version-history":[{"count":2,"href":"https:\/\/comptonantitrust.com\/index.php?rest_route=\/wp\/v2\/posts\/23\/revisions"}],"predecessor-version":[{"id":25,"href":"https:\/\/comptonantitrust.com\/index.php?rest_route=\/wp\/v2\/posts\/23\/revisions\/25"}],"wp:attachment":[{"href":"https:\/\/comptonantitrust.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/comptonantitrust.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/comptonantitrust.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}